Tuesday 27 March 2012
A scheme giving taxpayers the opportunity to correct income tax irregularities has generated an additional £2.4m for the funding of public services.
In 2011, the Director of Income Tax offered a "once only" opportunity for taxpayers to put right any income tax irregularities through the Income Tax Irregularities Scheme (known as "ITIS").
The terms of ITIS were that, by 31 March 2011, people intending to make a disclosure should register that intention with the Income Tax Office, and should make the disclosure no later than 30 September 2011 (unless permission had been obtained for the deadline for disclosure to be extended).
The benefits of making a disclosure under ITIS were:
- no penalty would be imposed under the Income Tax Law,
- the Director of Income Tax would not seek to prosecute any person under the Income Tax Law.
There were 153 registrations under ITIS, 18 of which remain to be finally settled (mostly due to the complexity of the matters which have been disclosed).
It is already known, however, that the total omitted income which has been disclosed under ITIS exceeds £8.7m. The tax and late payment surcharges which have arisen as a consequence are £2.4m.
Rob Gray, Director of Income Tax, said:
"When my intention to offer the terms of ITIS was first made public, at the end of 2010, there were comments, made in the media and in internet discussion groups, that the scheme was unlikely to bring in significant amounts of revenue.
In fact, 153 taxpayers have come forward to take advantage of the terms of the scheme, and this has given rise to an additional £2.4m, which can be used for the running of the island, that otherwise may not have been available. In the context of the size of Guernsey's annual tax collections, to me that makes ITIS a resounding success."
When ITIS was introduced, the Director made it clear that, following expiry of the scheme, if enquiries made by the Income Tax Office established that anyone's income tax return was incomplete or incorrect for any year prior to the calendar year 2011 (which is the period covered by ITIS) a minimum penalty of 100% would be applied in order to reflect the fact that the taxpayer had failed to take the opportunity to put their income tax affairs in order under ITIS.
Rob Gray said:
"Clearly, anyone who took advantage of ITIS was able to avoid the payment of penalties and also had protection from prosecution under the Income Tax Law. It would be naive, however, to expect every person who had made an incomplete or incorrect tax return to take advantage of ITIS. There had to be consequences, therefore, for those that did not put their income tax affairs in order under the scheme. That is why I have revised the Statement of Practice on Penalties to make it clear that anyone who is discovered to have made an incorrect or incomplete return for calendar years prior to 2011 can now expect to pay a minimum penalty equivalent to the amount of the tax evaded.
Tax evasion is often considered as a "soft" crime - indeed, it is not uncommon to hear people boasting about what they have done. The effects of tax evasion touch every person on the island who uses public services, as it is the taxes that we pay that fund those services. Tax evasion is not a crime just against the Income Tax Office but against the whole of the island."
During 2011, the Income Tax Office Compliance & Investigation Unit spent a considerable amount of time dealing with disclosures under ITIS. However, the members of the Unit still had the opportunity to finalise 133 other investigation cases which gave rise to an additional £870,000.
The mandate of the Unit is to tackle tax evasion and tax avoidance.
The ability of the Income Tax Office to investigate suspected tax evasion and avoidance has increased considerably in recent years due to the expansion of the powers available to obtain information under the Income Tax Law; closer working with Guernsey law enforcement (following the enactment of the Disclosure (Bailiwick of Guernsey) Law, 2007) and information becoming available through various international agreements that the island has entered into (such as Tax Information Exchange Agreements).
In addition, members of the public who are concerned about other people evading tax often pass on their concerns to the Income Tax Office. The Compliance & Investigation Unit always treats such information in confidence.
There is a telephone "hotline" - 747900 - on which callers can leave details of information that they have.
There is also a confidential e-mail address - email@example.com - to which information can be sent.