‘Innocent errors’ to avoid NDO penalty

Savers who have failed to pay tax on funds in offshore accounts will not face a penalty if they have made an ‘innocent error’.

HM Revenue and Customs (HMRC) has confirmed it will not levy a fine on individuals who were misled by financial professionals or have suffered a bereavement or serious illness.

Postal strikes or floods will also be classified as ‘reasonable excuses’, according to recent reports. However, those that claim they were ignorant of the basic law will still incur an additional 10% charge on the unpaid tax.

The conditions are part of the Government’s National Disclosure Opportunity (NDO), which was launched on 1 September. The scheme offers taxpayers with undeclared income or gains from offshore accounts a final opportunity to make a full disclosure in favourable circumstances.

It comes as the UK Government and Switzerland reached an agreement to share tax information about individuals where a justified request has been submitted.

‘I very much welcome the Swiss Federal Council's agreement on international co-operation in tax matters and their adoption of the OECD standard on administrative assistance,’ said Treasury financial secretary Stephen Timms.

‘The days when hiding money off-shore represented a viable means of evading UK tax are rapidly drawing to a close.’