According to a report in The Scotsman earlier in January, “Edinburgh is one of the top spots for UK tax avoiders.” Interestingly, the Edinburgh paper had this story the day before the Accountancy Today website, but the latter also carried it under a similar headline, viz, “Slough ‘top spot’ for UK tax avoiders, study suggests.”
Indeed, in the list of shame, Slough was top, with 47 per 100,000 residents “who have admitted underpaying tax from offshore investments last year,” followed by London on 39 per 100,000, Watford with 37 and then Edinburgh with 30. For reference, the UK average was 17. Perhaps gratifyingly, no other Scottish city was in the top 20 offenders, but it’s worth pointing out that this study was of only one area of chicanery, namely, the underpaying of offshore tax interests. How different locations compare when it comes to other forms of tax-dodging would be no less instructive.
If anyone thinks this is a risk worth taking, be aware that the penalties are substantial. HMRC is, quite rightly, looking out for taxpayers with undeclared offshore interests and when it finds them the penalties can be as much as 200 per cent of the unpaid tax. Fessing up is smart (although not as smart as not trying it on in the first place) as this has the potential to reduce these charges to less than 100 per cent – still a lot, but half what they might have been.
We appreciate that sometimes genuine mistakes are made in this area, however, as we all know, ignorance of the law is no excuse – especially where HMRC is concerned! Moreover, and this is something that neither publication picked up on, it’s worth pointing out that deliberately withholding information/underpaying offshore tax interests is actually tax EVASION, not avoidance. Evasion, everyone agrees, is a no-no, whereas tax avoidance is a greyer area as the government does offer a number of legitimate opportunities for millions of us legally to avoid tax (ISAs, pensions, etc.). If you are in any doubt, get in touch with M&S as we have significant experience inn dealing with HMRC enquiries. We’ll help you make sure you pay only the tax that’s due, advising when and where to flag up any aspect of our financial affairs that might set alarm bells ringing with HMRC. It’s far better to be safe than sorry!
Julie Downie, Senior Accounts Manager