OFFSHORE PRESSURE IS ON FOR WELSH INVESTORS, WARNS BandA
A leading firm of professional advisors is warning that over 200,000 people in Wales may need to take specialist advice in the next month to avoid the financial pain which a tax clampdown on offshore bank accounts is about to inflict on them.
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Broomfield & Alexander estimates that around 10% of the adult population in Wales may have such accounts, which are typically run from the Channel Islands, Ireland and the Isle of Man.
They are being eyed up by Her Majesty’s Revenue and Customs following a recent court ruling which has obliged several high street banks to release details of offshore accounts to them, giving them the ability to check whether the correct tax payments have been made over the last 20 years.
The accounts pay interest gross, but British taxpayers are required to declare this amount on their self-assessment forms and pay tax at the appropriate rate – and not just when the money is transferred into an onshore account.
Likewise, the majority of offshore investments require taxpayers to pay tax on any profit when it is received; they are not allowed to defer tax payments to a later date when they may be in a lower tax band.
HMRC is offering an amnesty until June 22, when a 10% penalty will be levied on top of the total tax due on undeclared income. After 22 June, much higher penalties will be imposed.
Broomfield & Alexander director Mark Jones said the pressure was now on for offshore account holders who either avoid paying tax deliberately, or who are not aware that it is due.
“Although account holders are being offered the amnesty, thousands of Welsh investors are still in a vulnerable position,” he said.
“There are two problems here. One is the potential difficulty of an individual assessing, within a very tight timescale, exactly what tax is due on their accounts. It’s easy to get the sum wrong, especially if, as is often the case, these are investment accounts which have not been looked at for a long time.
“The other issue is that for many people, the resulting tax bill could still be substantial.
“We are urging people who think they might need to make a full disclosure to take professional advice immediately to help them identify any tax liabilities, get the initial declaration in and plan the cashflow necessary to fund the bill.
“Time is of the essence if they do not want to be stung with a large penalty.”