Employment Tax Expert

Anyone hiding money offshore could face new penalties of up to 200 per cent, HM Revenue & Customs (HMRC) have warned.

From 6 April 2011 HMRC will increase their potency as far as tax investigations are concerned with increased penalties for offshore non-compliance – for income tax and capital gains tax – these will be linked to the tax transparency of the country involved. There will be increased penalties in place for under-declared income and gains from territories which do not automatically share tax information with the UK.

David Gauke, Exchequer Secretary to the Treasury, said:

“The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.

“We have given HMRC an extra £900m to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe.”

Dave Hartnett, Permanent Secretary for Tax, at HMRC said:

“We are serious about tackling offshore evasion. Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.

“These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF).”

The new penalties for income tax and capital gains tax non-compliance classify territories into three groups, which determine what level of penalty will apply for non-compliance.

This employment tax expert says, let’s have further tax investigations into expenses claimed by MPs and Peers following the conviction of Lord Taylor of Warwick of false accounting over his House of Lords expenses.

The peer had argued the six claims he had submitted – totalling £11,277.80 – were made in good faith. He acknowledged that he had contravened the expenses rules, but argued he had done so because it was a common practice amongst peers to claim items “in lieu of a salary” – please, you are a qualified barrister and quite frankly in any other walk of life this would be seen as quite simply stealing and at the bare minimum you would be out of a job, let alone facing the full wrath of the judicial system.

Stephen O’Doherty, reviewing lawyer for the Crown Prosecution Service special crime division, said: “No one could sincerely believe that a home in which they had no financial interest, had never lived in and had scarcely visited could count as their main residence.

“Or that it was permissible to claim for driving between Oxford and Parliament when they had not done so.

“Yet Lord Taylor claimed exactly that and landed the taxpayer with a bill of more than £11,000.

“A jury has seen through his dishonesty by finding him guilty of theft by false accounting. He will now face the consequences of his actions.”

In her closing speech to the jury, Helen Law, prosecuting, said the case was about “where Lord Taylor was living and where he wasn’t living”. Speaking of the trips he claimed for, she said: “Those were journeys that didn’t happen from a home that wasn’t his.

“Lord Taylor knew those facts and he said he didn’t attempt to mislead anyone. I’m going to suggest that as a lawyer and as a member of the House of Lords, the alarm bells would have been ringing loud and clear.”

Despite living in Ealing, west London, Lord Taylor nominated a property in Oxford as his main residence, which is where his half-nephew lives. In fact according to the reports the peer had never stayed overnight there and had only ever visited the property twice. He subsequently submitted six claims between March 2006 and October 2007 for overnight stays in Oxford and mileage to and from property. I will leave it to my readers to decide on the best course of action for this person!!!

It has been strongly rumoured that whistle-blowing website WikiLeaks will expose thousands of wealthy bank clients who have used offshore accounts to avoid tax.

Former Julius Baer Bank employee Rudolf Elmer has handed over two CDs containing the potentially dangerous information to WikiLeaks founder Julian Assange. Elmer who is to stand trial accused of coercion and violating banking secrecy laws – has said he wants to expose mass potential tax evasion.

It remains unclear exactly when and how much information will be released, although it’s been suggested that Assange will start publishing the leaked details in two weeks time after verification.

So If you’re someone that has an offshore bank account that is undeclared you need to come forward and declare it asap because there is no telling which tax authorities Elmer may have passed the details on to as well as WikiLeaks and there is every chance that HMRC will launch a tax investigation into reported cases

The Elmer list is not thought to be the one HMRC had previously bought, although WikiLeaks could hand over some of the information to the Serious Fraud Office.

The CDs are understood to include the details of 2,000 wealthy individuals and corporations from the UK, US, Germany, Austria, Asia and elsewhere.

This employment tax expert wrote some time ago about the disgrace that was the MPs expense saga. It was quite simple, an employee would be under a PAYE/NIC investigation, if found guilty, sacked and likely prosecuted, so why should MPs be any different. This is not a political statement, bring it on any MPs, any parties should be treated like anyone else. So finally today do we see some justice:

Former Labour MP David Chaytor has been jailed for 18 months after he pleaded guilty to making false Parliamentary expense claims. He pleaded guilty to three counts of false accounting relating to rent and claims for IT consultancy work that he had never been required to pay for.

He had asked for rent money covering homes in London and his constituency but it later transpired the properties were already owned by him and his mother.

Peter Wright QC, the prosecutor, said: “We say Mr Chaytor knew the rules, and we say why else would he produce false documents in support of his claims otherwise?”

This should make an interesting landmark for other cases due to be heard and let’s make sure that Parliament are also going to have to deal with business record checks – remember guys, accurate and adequate records!

HMRC are going to be on the attack in order to raise £600m starting this year (remember this number as you will need it later) so how are they going to do it – well, HMRC published a Consultation Paper on 17th December announcing that they intend to start a programme of Business Records Checks (BRCs) that will review both the adequacy and accuracy of business records within the SME sector.

This employment tax expert thinks that HMRC should invest in a good dictionary when it comes to the word consultation because once again they haven’t even waited for the period of consultation to expire (which it does on 28 February 2011) the programme of checks will happen starting in the second half of this year with HMRC projecting 50,000 reviews annually for the next 4 years. Their excuse is that the Consultation is merely concerned with how to implement the programme, not whether it is the right thing to do.

The BRC programme will also have a nasty sting in the tale as it is backed up by a tariff-based penalty regime for failure to keep proper records. The maximum penalty for failure to maintain business records currently stands at £3,000. HMRC have said that they do not intend to have a regime which simply levies £3,000 every time there is a failure to keep proper records – but watch this space because with a bit of cunning maths, HMRC have already stated in their impact assessment that this initiative will bring in £600million over the four years. Now that’s 4 years x 50,000 reviews x £3,000 penalties which comes to an amazing £600million

So now is the time to make sure that your records are correct because this is merely the tip of the iceberg, inadequate or inaccurate records will be only one part of the review and then you’ll be into a full employer compliance review/tax investigation. Contact us today to see how this employment tax expert can stop your company being a statistic