Rich Brits Give Up Almost Nothing Under Final Chance Tax Program
(Bloomberg) -- The U.K. taxman is coming under fire over its program giving the wealthy one last opportunity to disclose income or assets stashed in secretive offshore accounts.
The so-called final chance initiative had netted 53.4 million pounds ($70.8 million) in tax, interest and penalties by early February, according to a Freedom of Information Act request. The program, which closed at the end of last year is still tallying the final amount, but it’s expected to fall far short of the 300 million pounds anticipated.
Nicky Morgan, a Conservative lawmaker who chairs Parliament’s Treasury select committee, said her peers should explore why it’s “not bringing in as much tax as expected from dealing with offshore tax evasion.” The Treasury select committee is a panel of lawmakers who scrutinize the work of the treasury and the revenue and customs agency.
Individuals hold about $7 trillion offshore in personal wealth, according to the Organization for Economic Cooperation and Development, and governments worldwide are now harnessing data-sharing agreements to crack down on their citizens hiding income or assets overseas.
More than 100 countries exchanged unprecedented levels of data last year on their citizens’ overseas activity through an OECD initiative to target individuals evading taxes. In guidance published for the Worldwide Disclosure Facility’s September 2016 launch, the U.K.’s tax authority warned it was the “final chance to come forward” before the global introduction of the common reporting standard.
The 53-million-pound figure “is almost nothing compared to other disclosure facilities,” said Amit Puri, a former government tax inspector who now works for London-based accounting firm Lancaster Knox. “It’s embarrassingly low when you think the WDF was about trying to open the doors to deal with assets and investments worldwide and the penalties for not disclosing haven’t been higher.”
The Office for Budget Responsibility said this week it cut the forecast of the amount expected to come in from the measure for the current tax year by almost 20 percent to 195 million pounds.
Her Majesty’s Revenue and Customs collected more than 1 billion pounds through another offshore wealth program that ran for almost three years and closed in 2015. Under that initiative, tax evaders faced capped penalties without facing risk of criminal charges. Those who came forward through the WDF faced a minimum penalty of 30 percent on the unpaid U.K. tax and weren’t immune from criminal prosecution.
The tax authority has received more than 17,000 submissions through the program. Not all of them will result in tax settlements.
“Everyone has to pay their tax and the vast majority of people and businesses already do,” a spokeswoman for HMRC said in an emailed statement.
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