Confusion reigns over HMRC's conflicting tax amnesties
Investors unsure whether Liechtenstein accounts covered by new amnesty
The final olive branch has been extended by HM Revenue & Customs to
individuals with money and assets in offshore accounts, but so far there has
been no flood of applicants to take part, according to advisers.
The amnesty, or new disclosure order, was launched on 1 September in a bid to
recoup unpaid tax on money held by UK residents overseas.
Over the past few months, the taxman has secured the offshore account details
of thousands of individuals from hundreds of financial institutions. But there
remains confusion among investors about where they stand when it comes to
whether accounts held in Liechtenstein subject to its own agreement with the
taxman are covered by the terms of the new amnesty.
Anyone that has opened an offshore account through a UK branch or agency of a
bank must use the NDO. But anyone who has opened an offshore account through a
bank in the Channel Islands, or any other offshore location, can move it to
Liechtenstein and make a disclosure by the 1 December deadline.
“It makes a big difference whether you opened the account in Jersey or your
local [bank in the UK.] We’re getting a lot of phone calls from people dipping
their toe in the water, but I’ve had people asking ‘ Should I use both
[disclosures]’ which would not be a good idea,” said John Cassidy, tax
investigations partner at PKF.
The Liechtenstein agreement has easier terms than the NDO. One major
difference is that the Liechtenstein deal restricts any disclosure to a maximum
of only ten years, unlike the 20 years of the NDO.
“People don’t understand and they need to be made aware,” said Dawn Register,
senior manager in tax investigations at BDO Stoy Hayward.
Cassidy added that advice on the Liechtenstein disclosure said investments
had to be in Liechtenstein on 1 August 2009 for the investors to qualify for the
amnesty starting 1 September, it also said that if investments are moved into
the principality after that date, the offshore investor can still participate in
the Liechtenstein amnesty from 1 December.
This added another layer of confusion, according to Cassidy. “There remains
many unanswered questions which is, at best, unhelpful.”
HMRC said it was “early days” and there had been no complaints of confusion.
