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Tax Investigations eFlash | July 2008
New targets announced for next phase of HMRC Offshore Disclosure Facility
HM Revenue and Customs (HMRC) has recently briefed the Sunday Times that it is actively targeting those UK taxpayers who have money in the Channel Islands, the Virgin Islands, Panama and Monaco as well as following up on the 2007 Offshore Disclosure Facility (ODF).
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Action against 25 foreign banks: HMRC is seeking orders against 25 foreign banks to hand over details of accounts held in the above locations. This will be similar to the orders obtained last year against the big five UK high street banks under s.20(8A) TMA 1970 for details of an unnamed class of account holders. These are the first orders against 117 UK and foreign institutions targeted by HMRC, and are believed to be in addition to notices against 15 Liechtenstein banks.
Clients with undeclared accounts with certain foreign banks are likely to have the details made available to HMRC. HMRC has indicated that there may be better terms on offer, with a reduced penalty incentive, for voluntary disclosures before the taxman challenges non-disclosers. If your clients did not come forward in 2007 because their accounts were not with the banks involved, their time for making voluntary disclosures may be very limited.
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HMRC use of 2007 ODF data: HMRC has identified around 20,000 taxpayers who registered for the 2007 ODF but who did not submit formal disclosures by the November deadline. HMRC indicates that these people will be rigorously followed up. HMRC is about to prosecute the first tranche of people found to have made incomplete disclosures.
It may be that many taxpayers who did not complete the ODF process are relying on sustaining a non-domiciled argument (ie that they did not have any tax to pay on this income)- this needs to be very carefully handled and a robust evidence base assembled to defend that status.
If you would like to discuss any issues or would like more details on how these developments may affect your clients, please speak to your usual Grant Thornton contact or any of the following:
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