Disclosure Campaigns Are Not Amnesties, Warns Tax Man

Failure to come clean about offshore accounts when using HM Revenue and Customs’ Overseas Disclosure Facility (ODF) could lead to severe penalties.

HMRC warns that its campaigns are not amnesties and that people will have to pay all their tax, interest and penalties regardless of what they declare.

This means that anyone failing to declare all of their offshore assets when making a voluntary declaration will be treated as though they haven’t made a declaration at all.

HMRC has already raised nearly £550 million from its ODF campaign and the subsequent New Disclosure Opportunity (NDO) and carried out more than 18,500 investigations.

The disclosure campaigns have so far targeted those working in medicine, trades and tutoring, urging taxpayers to declare their offshore assets.

First prosecution

HMRC has also been encouraging higher rate taxpayers and VAT defaulters to also come clean.

The call to be honest when making a declaration comes after HMRC’s first successful prosecution involving the ODF which saw two businessmen jailed for lying about their offshore accounts.

One of them, Roderick Smith, from Wigan, declared just one account and failed to declare that he had 11 other offshore accounts.

Stephen Howarth, Smith’s partner in the business from Hyde, Cheshire, did not make any disclosures during the campaign.

HMRC was alerted by Germany’s tax authorities and an investigation uncovered that the duo had not declared the true levels of their company’s sales and put profits into several Isle of Man bank accounts.

The business, which offered computer software to online stores, with most sales coming from Germany, evaded income tax of £500,000.

Both men were given the opportunity to disclose their offshore assets using the ODF, but Howarth failed to register, while Smith did so but did not make a full declaration, though he did pay £40,000 under the scheme.

Jail sentences

Their actions led to Smith being imprisoned for 15 months and Howarth for a year.

Confiscation orders were issued for Smith worth £300,000 and Howarth for £200,000.  Failure to pay the money within the next two years will see their sentences being extended by 15 and 20 months respectively.

Mike Preston, who leads investigations for HMRC, said: “Smith and Howarth stole from UK taxpayers, using the money that should have paid for public services to fund luxury lifestyles filled with prestige cars and expensive holidays.

“HMRC is continuing to clamp down on tax evasion and targeting UK taxpayers using offshore accounts to disguise their wealth.”

HMRC is running a tax evasion hot line and urges anyone who suspects tax fraud to contact them on 0800 788 887.

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