Confess, before it is too late

Published on 22 November 2009

In an appearance on You Tube the Permanent Secretary for Tax gives a stark warning to those who may be hiding something overseas. But unhelpfully, HMRC and their website make it very difficult to find any information on overseas issues intelligible to the ordinary taxpayer.

LITRG is supportive of initiatives which catch people who are evading tax and then bring them fully within the UK tax fold. But at the same time we believe that HMRC have an obligation to explain to people what they expect of UK taxpayers (indeed the new Charter endorses that view).

HMRC have made an offer to people who have not disclosed all their income or assets outside the UK. This offer for them to come clean in return for a reduced penalty and immunity from prosecution runs until 30 November 2009. The most senior tax professional in HMRC, Dave Hartnett, stars on a You Tube video encouraging those who have not yet taken up the HMRC offer, to do so.

Information on the HMRC website

But Mr Hartnett’s warning is not backed up by sound, comprehensible information on the HMRC or Directgov websites. This could lead to misunderstandings and might unnecessarily frighten people who have done nothing wrong.

The greatest number of people in the UK who have overseas bank accounts are likely to be international students and migrant workers. We do not think that Mr Hartnett intended to have such people queuing up to contact him when he said “if you are a UK based investor and have offshore accounts or assets you must declare them”. He does however refer people off to the HMRC website to find out.

Tax is complex and in the difficult area of overseas sources it can become impossible for the lay person to understand. This is why it is critical for HMRC to reach out to people, both through their website and through targeted outreach, to inform and enlighten.

So how are HMRC doing? We tried to find out.

Income tax for someone in the UK

If you go into the HMRC website via the Home Page you are likely to reach Individualsand then Income tax and onwards to the Introduction to Income Tax. Here in page after page of information (including in Taxable and non-taxable income at a glance) you will find it difficult to spot advice about the “offshore accounts or assets” that Mr Hartnett talks about.

This can only undermine the campaigns HMRC has been running on offshore income for the last two years.

Income tax for visitors to the UK

For many years, LITRG has been asking for good, understandable information on the HMRC website for the overseas visitor who comes with a low income and a low knowledge base into the extreme complexity of UK tax rules.

The material held on the HMRC website is incoherent and has not been updated for major changes in the law which occurred in the Finance Act 2009. Some parts are actually misleading and a visitor could find themselves acting on advice which has now been superseded.

Conclusion

The point we make is that if HMRC expect their customers to do the right thing then there is a lot of scope for helping them on the way.

(22-11-2009)

Contact: John Andrews (0844 579 6700 Fax 0844 579 6701)