Date of issue: 19th June 2007

BEWARE AMNESTY ON OVERSEAS INVESTMENTS

One of Birmingham's leading taxation specialists believes there is a lot more to the Government's 'tax amnesty' than meets the eye and is urging people who had not declared tax on overseas assets to seek advice before they come clean.

Shona Cutler, a partner at independent Chartered Accountants Clement Keys, points out that the Government amnesty is not as generous as it appears.

"I think it is highly likely that HM Revenue & Customs will delve deeper into your finances to ensure that funds in the offshore accounts have been properly accounted for and you may land yourself with much more than you bargained for," she says.

The amnesty covers all undeclared tax liabilities both onshore and offshore and covers unpaid tax on investments such as cash held in accounts in so called 'tax havens' like the Channel Islands and rent from overseas properties. Instead of paying the full penalty, on the undeclared tax the Government is offering a fixed penalty of 10%. However, when the amnesty ends, on June 22, HMRC will use new powers that enable them to obtain information from foreign banks to recover unpaid tax.

The technology available to the banks and the Inland Revenue enabled such orders for disclosure to be made. In the last 12 months, the Revenue has won cases and can now ensure that the banks, provide details of its UK customers' offshore investments.

HM Revenue & Customs estimates that one in five people has underpaid tax on their investments and Mrs Cutler says it is not only those who have deliberately hidden assets and investments that could be caught out. People who did not realise they had to pay tax on assets held overseas and those who have underpaid UK tax because of an error also fall foul of the law.

Tax on foreign investments is not due by people who are not UK resident or domiciled but rules determining resident and domicile for tax purposes are also being closely examined by the tax authorities and again cases heard by the Courts have also been decided in the Revenue's favour.

"In order to confirm your residence or domicile status HM Revenue & Customs will check your movements; the availability of accommodation and your intentions adds Mrs Cutler".

"Some foreign holiday home owners may upgrade their properties by swapping, in the belief that they will not have to pay capital gains tax. This is not the case, these transactions will also need to be disclosed under the amnesty and tax may be due".

Ignoring the tax amnesty is not an option because it represents the last chance to put your affairs in order for a fixed penalty of 10%. The amnesty requires the taxpayer to provide all information for the preceding 20 years however it may be possible to negotiate a better settlement under the normal investigation and disclosure procedure.

"Time is running out and I would advise anyone who thinks they are affected to seek professional advice to decide the best course of action," says Mrs Cutler,