Will The Treasury Get To Bert Smith Before The Grim Reaper?
Jeremy Hetherington-Gore Unleashed
26 June, 2007
Money left over sits in bank accounts in Malta and around the world, earning enough interest for Bert and his wife Dotty to have a comfortable life.
Bert is non-resident in the UK, of course, and pays tiny amounts of tax in Malta on his income.
But they are getting old, and Dotty needed hospital treatment in London last year, so Bert opened an HSBC bank account in Jersey to use to pay the bills.
Whoops! Now Bert is one of the 400,000 'offshore account holders' to whom HMRC offered its amnesty this month.
And Bert is one of the 350,000 account holders who didn't take up the amnesty.
1. He didn't know about it until very late on. HSBC wrote to him about it, but because he used the address of his house in Barnsley (rented out, of course) to open the account, he didn't get the letter until just before the amnesty expired.
2. Bert thought about the US$600,000 he still has in other foreign bank accounts, the interest on it over 15 years, where the money came from, all the trips he made to the UK while he was non-resident, and the cash he gets from his tenants.
So Bert thought to himself, well I'll be dead within five years, and they probably won't find me anyway. So he folded his arms, and did nothing.
400,000 is obviously just the tip of the iceberg. First, it refers only to offshore accounts operated by the top British banks for British nationals. How many Brits have bank accounts with foreign banks or with other UK financial institutions? Second, it refers only to individuals. How many Brits use companies to invest their wealth (especially since the EU Savings Tax Directive)? There are 700,000 IBCs in the British Virgin Islands, for instance.
In a recent survey, 46% of Brits said they wanted to live somewhere else, and a substantial proportion of them are probably preparing for that 'somewhere else' by opening a bank account which they might just absent-mindedly forget to declare to the taxman.
So altogether there are probably at least a million overseas hidey-holes for Brit-owned money which is either black or at least a shade of grey.
Now the poor, over-worked tax-man is going to have to trawl his way through this submerged forest of money-trees and the accompanying tissue of dissimulation about the origins of the money. Will it be worth it? The Treasury will of course pretend that it's worth it, and anyway will be able to fall back on the principle of equity: why should Bert get away with when all the rest of us pay our taxes? (Well, maybe not quite all the the rest of us, but anyway at least one of us - I'm sure Gordon Brown pays his taxes.)
The one thing that won't occur to the Treasury, but has occurred to 46% of the population, is that when government takes half your income in order to waste it on incompetently-run public services for single parents, layabouts and hoodies, you are quite likely to defend your hard-earned dosh as best you can.
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