CIOT: Offshore Disclosure Agreement

HM Revenue &Customs’ (HMRC) announcement this morning of a new procedure for taxpayers with undisclosed sources of income, particularly offshore bank accounts, is clearly a major development in UK tax administration.

The Chartered Institute of Taxation (CIOT) has always supported any initiative which makes it easier for people to meet their tax obligations, and we therefore support the broad principle of the initiative which HMRC have outlined today.

John Cullinane, CIOT President, says: “This is clearly a complex area and we believe that there a number of aspects to this initiative which will need very careful consideration. It is right that taxpayers who have failed properly to disclosure their tax liabilities should be required to pay the tax that is properly due. Equally, is very important that proper safeguards are in place to ensure that people do not end up paying tax which is not legally due, perhaps because of their domicile and residence status.”

HMRC have indicated their willingness to enter into a dialogue with the professional bodies in order to ensure that areas of concern are dealt with properly, and the CIOT looks forward to taking part in those discussions.

John Cullinane adds: “HMRC are sending out a clear signal to those who have deliberately evaded tax on offshore accounts that this initiative offers a chance for them to come clean and bring matters up to date: if people do not take this opportunity, then they can expect to be faced with very significant penalties when HMRC commence their programme of investigating those holders of offshore accounts who have not come forward. We do have concerns that the scope of the initiative is extremely wide and that, at the moment, there is very little guidance for those with purely onshore irregularities. We hope that we can work with HMRC to resolve this, and the other areas of uncertainty. Our Members in practice will face some difficult issues in getting to grips with the structure of this new initiative within the short timescale which HMRC have allowed, and we will be publishing our guidance for members within the next few days. “

Notes to Editors

The Chartered Institute of Taxation (CIOT) is a registered charity (number 1037771) and is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT deals with all aspects of direct and indirect taxation. Its primary purpose is to promote education in and the study of the administration and practice of taxation. One of its key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities. The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its aims: it is entirely apolitical in its work. The 14,000 members of the CIOT have the practising title of ‘Chartered Tax Adviser’.

The Institute was established in 1930 and received its Royal Charter in 1994. It is a United Kingdom member of the Confédération Fiscale Européenne (CFE), the umbrella body for 150,000 tax advisers in Europe. As part of its charitable activities, the CIOT also sponsors the Low Incomes Tax Reform Group that works to improve and simplify the tax system so as to make it more responsive to the needs of those who cannot afford to pay for tax advice. The Institute offers the Advanced Diploma in International Taxation as a specialist qualification for international tax practitioners primarily working in corporate tax.