Budget 2009, 'Carrot and stick' approach

Budget 2009 - 'Carrot and stick' approach

The 'carrot'- a new disclosure opportunity

A new disclosure opportunity ending in March 2010 will give UK residents with offshore bank accounts a chance to disclose any unpaid tax of their own accord. It is expected that this opportunity will be launched in autumn 2009.

The 'sticks'- Publicising deliberate tax defaults of £25,000 or more

From a date to be announced, HM Revenue and Customs (HMRC) intends to publish the names and details of taxpayers (individuals, businesses and companies) where deliberate defaults have lead to a loss of tax of more than £25,000. Taxpayers making a voluntary disclosure or a full prompted disclosure within the required time specified by HMRC will avoid being publicly named. Penalties of over £5,000 - taking a closer interest

For the deliberate understatement of tax resulting in a penalty of over £5,000, HMRC will check and monitor an improvement in systems and future compliance for a period of 5 years. At this level of penalty, the defaulters names will not be published, but their affairs will be closely scrutinised. Grant Thornton's view

From 1 April 2009 HMRC has extensive new powers and penalties in its arsenal and will come down hard on anyone guilty of tax evasion. It is therefore more important than ever to seek expert advice from specialists in dealing with HMRC and to make an assisted voluntary disclosure of any irregularities before being challenged by HMRC. This will provide the best protection from these latest developments and assist with mitigating any penalties arising.

If you would like to discuss any issues or would like more details on how these developments may affect your clients, please speak to your usual Grant Thornton contact.

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