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Dangerous Waters - HMRC Closing the Offshore Net


HMRC is actively working with the international tax community to pursue offshore tax avoidance and evasion - they see it as another important step in closing the tax net.

There is nothing illegal about an international structure, especially in a globally integrated economy and these arrangements may be perfectly legitimate and may already have been declared to HMRC. However, where HMRC identify tax evasion or sloppy implementation of a tax avoidance scheme by way of using offshore structures to hide assets and income, the tax investigation will become protracted.

HMRC has apparently identified over 200 UK accountants, lawyers and other professional advisors who advise on setting up offshore structures. No doubt they will be scrutinised at every turn and also UK residents who use these offshore structures need to carefully consider their taxation arrangements, and seek advice if necessary, to ensure they are compliant with UK tax law.

However, HMRC acknowledges voluntary compliance and offer a variety of disclosure facilities to help taxpayers regularise their position and bring things to the surface.

An early pre-emptive strike and choosing the right disclosure facility depends on the identified tax irregularities, which in some cases cases can result in “CDF CoP9” criminal prosecution immunities being arranged and mitigation of substantial financial penalties.

If a UK taxpayer is not paying the right amount of tax there is a way of declaring the matter to HMRC – removing the sword of Damocles - using a disclosure facility to get the best terms on offer.

If there are concerns about eligibility of using an offshore disclosure facility, but there are UK tax liabilities to disclose, a taxpayer should still take action to bring the tax affairs up to date – again this depends on the nature of the tax defalcation and whether there is a deliberate omission from the tax returns to consider.

If anyone needs appropriate tax advice or a second opinion then please contact Tax Networks Ltd.