Debt Help for Off-Shore Account holders
If you have an offshore bank account, debt may be closer to home than you think as failing to comply with the new demands issued by HM Revenue & Customs could cause you to end up in a lot of trouble and consequently, a lot of debt.
Following a ruling obtained in 2006 against Barclays Bank, HMRC can now insist on receiving full details of your offshore bank account.
If you are in possession of an offshore account which is accruing interest, it is advised that you disclose this information. If you decide to remain quiet and are discovered, you can expect to be treated quite severely. It is the requirement of UK law that interest accruing from offshore bank accounts, should be disclosed in your tax returns.
Many people have acquired offshore accounts for legitimate reasons. For example, some have worked overseas and have needed to open a bank account to receive wages or others may have purchased property abroad and are letting out the premises and receiving payments for rent. It is important that any interest accruing on any sums earned in your account is declared. The same applies if sums of money have been deposited into an offshore account which could have been deposited in a UK bank account and similarly to people who have been running a company abroad. All interest on your offshore account needs to be taxed along with any profits gained.
If you have any reason to believe that you are breaking the law and wish to voluntarily disclose your offshore account, you need to write to your Tax Inspector. If he feels that your account should be declared you will legally be responsible for paying tax on the interest accrued. Your tax inspector will send you ‘An Intention to Disclose’ notification which you will need to complete and return. You have the option to disclose information of your offshore bank account right up to 22nd June 2007. If you miss this date, you will still be able to inform HMRC. You simply need to go to the Inland Revenue website where you will receive information on how to calculate the amount of tax that you owe based on the interest that you have accrued. You will need to provide a fairly accurate estimation of the amount of tax that you owe and provide detailed documentary evidence as to how you reached your final figure.
If you ignore any opportunities to own up to your interest, you could be looking at a debt in the region of £4,100 for every £1,000 of tax that should have been declared. This debt will consist of interest and a penalty of 10%. However, a penalty amounting to 100% will be added to your bill if you do not respond under this amnesty period, which will leave you with debt to the region of £5,000.
Many taxpayers are reluctant to declare their offshore accounts for fear of being unable to cope with costly tax charges but honesty is the best policy and silence isn’t always golden!
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If your finances are a concern for you, there is free help available from the Debt Advice Trust. They can advise you on any debt issues you have.
Finance News posted on 30/05/2007 15:08:59
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