Tax news from the UK(…and it’s not exactly good news!)

news: Tax news from the UK(…and it’s not exactly good news!)

Offshore credit cards

under investigation

ACCORDING TO reports in The Sunday Times and The Financial Times, HM Revenue and Customs is about to force UK credit card providers to hand over credit and debit card details of around 30,000 people in the UK, whom are thought to be using undeclared offshore accounts to evade tax. The department has issued production orders on a number of credit card issuers on offshore accounts, according to advisers involved in the inquiry. 30,000 names are said to be on the hit list.

When the Sunday Times asked the tax department to comment, it neither confirmed nor denied the reports, but at the same time made its stance on tax evasion clear:

“It is known that there are a variety of ways in which people try to hide money offshore. We will continue to ensure that everyone who is liable pays the correct tax, and hiding money offshore is not acceptable. We cannot comment on which areas we are targeting, because that would warn off the people we are trying to identify.”

While banks contacted by the Times reportedly denied that such an approach had taken place, they did stress that they would provide such information if requested to by HMRC via a production order.

In a previous report, the newspaper had also reported that the Revenue has asked some UK banks to hand over details of chits from bankers drafts used to make cash payments to overseas accounts. These will be used to build up an audit trail on people keeping money in undeclared accounts.

Any taxpayers caught not declaring their offshore interests face heavy penalties. As the Times reports, the Revenue will demand payment of all taxes owed on offshore accounts over the past 20 years, plus interest. It will also impose a fine of up to 100 per cent of this sum.

Revenue increases

investigative powers

HM Revenue & Customs has recently recruited Roy Clark, former head of Crimestoppers and deputy assistant to the Metropolitan Police, as its first ever director of Criminal Investigations. The Revenue announced: “Roy has considerable experience of investigation work, which makes him very well qualified to lead a team of 2,000 investigators tackling fiscal fraud and smuggling, which costs the UK billions of pounds a year in lost revenue.”

The Revenue’s Special Offshore Fraud Group has also recently taken on 10 extra staff. A spokesman said: “It was always envisaged that the team would grow. It has generated more work, so this is a success story”.

Mike Warburton of Grant Thornton, an accountant, told The Times: “It is certainly true that the Revenue is stepping up its efforts to stop people evading tax by moving money offshore. There is a plan to crack down on people with offshore accounts, and I expect thousands of people to be investigated as part of that plan. Some will almost certainly be prosecuted.”

The Revenue’s efforts will also be boosted by the automatic exchange of information provisions of the EU Savings Tax Directive, which has just started.

Spending figures

reignite UK tax fears

Speculation that UK Finance Minister, Gordon Brown will miss his fiscal targets and break his self-imposed ‘Golden Rule’, has resurfaced after the latest government figures revealed that tax revenues are failing to keep in line with increasing rates of expenditure.Sluggish sales on Britain’s high streets have been largely to blame for reduced growth in tax receipts in May. Tax revenues must rise by 8.5 per cent to ensure Brown hits his targets and the Golden Rule – which stipulates that the government should only borrow to invest over the course of an economic cycle – remains intact, but they only rose 4.2 per cent in May.

At the same time, the government embarked on a post-election spending spree, which resulted in the current account deficit pushing up net borrowing to £8.7 billion, the highest monthly figure since 1992.

Many analysts warn that the government cannot continue on its present fiscal path, without soon resorting to the need for extra tax revenues to plug the gap in its finances.

However, a government spokesman has pointed out that the average government spending over the last two months was lower than the Treasury’s own forecast for the year.

Six per cent of the population

pay 55 per cent of UK taxes

The Telegraph has reported that just 3.6m people in the UK are paying £73.2billion in income tax, which equates to six per cent of the population paying 55 per cent of the UK’s tax revenue. According to the newspaper, this proves that the government is forcing higher-rate taxpayers to shoulder more than half of the income tax burden.

Income tax receipts this year are expected to reach £134billion, nearly £10billion more than last year.

The newspaper concludes these figures demonstrate that the fact that tax bands rise more slowly than earnings, increases the burden on Middle England. A further 200,000 people are expected to be drawn into the higher-rate tax bracket this year.

There is nothing as certain as

death and taxes

The dead have been targeted by HM Revenue and customs in a new attempt to crack down on inheritance tax.

A new initiative has been launched by its special investigative arm, Special Compliance Office, to cross-check inheritance tax returns with income tax returns filed during the deceased’s lifetime, in an effort to check that they are consistent.

Officers can now access all inheritance tax returns – where it appears that tax has been underpaid, an investigation will take place and the estate could be forced to hand over the difference.

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