Tax Dodger Amnesty Loophole Closed By HMRC

The constant battle raging between clever lawyers and HM Revenue & Customs (HMRC) has led to the goal posts moving on a tax amnesty offer. After alleged abuses of the Employee Benefit Trust settlement arrangement (EBT) the scheme will be closed early, denying taxpayers the chance to settle their affair on amicable terms. However, HMRC claims taxpayers who would have to make a larger EBT settlement are trying to manipulate another special tax declaration scheme to pay less tax. An EBT is an offshore trust where high earners store their income to drawdown in phases to avoid income tax and national insurance contributions. EBTs were favoured by wealthy celebrities and sports stars, but were deemed illegal by HMRC following test cases and law changes. Undeclared offshore cash and investments Any taxpayer with an EBT should make a clean breast of their tax affairs through the EBT disclosure process, which charges higher tax penalties than the other tax deal – the Liechtenstein Disclosure Facility (LDF). The LDF arrangement allows taxpayers with undeclared offshore bank accounts and investments to agree a tax settlement with HMRC on beneficial terms. Jennie Granger, HMRC’s director general of enforcement and compliance, said: “The EBT and LDF disclosures are two different vehicles for taxpayers who need to clear up their affairs under different circumstances. “EBT users should come forward as soon as possible to take advantage of our scheme for settlement on favourable terms. If they don’t, HMRC will pursue them through the courts, where they could end up paying more tax and add to their costs with legal fees.” So far, 700 EBT schemes have settled under the special arrangement and paid around 3800 million in income tax and national insurance contributions. HMRC tax crack down The LDF is a tax declaration scheme where financial firms in Liechtenstein identify clients and investors who have an undeclared UK tax liability. The scheme started in September 2009 and runs until April 5, 2016. So far, nearly 132,000 taxpayers have registered under the LDF, with 95,000 tax settlements for an undisclosed amount. HMRC is running a series of tax disclosure opportunities for UK taxpayers, both onshore and offshore, including schemes for the medical profession and buy to let landlords. The initiatives are part of a general HMRC crack down on tax evasion following a £900 million government investment to track down suspected tax cheats. – See more at: http://www.iexpats.com/tax-dodger-amnesty-loophole-closed-hmrc/#sthash.93mBrr4U.dpuf