In an effort to recover income from funds that might have been hidden offshore, the US introduced a Voluntary Compliance Program that offers reduced civil penalties and no criminal penalties.
At the time, IRS Commission Doug Shulman described the program as stating:
The goal is to have a predictable set of outcomes to encourage people to come forward and take advantage of our voluntary disclosure practice while they still can… We set up a penalty framework that makes sense for them. They need to pay back taxes and interest for six years, and pay either an accuracy or delinquency penalty on all six years.
The program, which has tentatively been referred to as a success, wraps up on September 23, 2009.
But while the US program is winding down, the British program is just getting started. The UK has announced an amnesty program for unpaid taxes on income linked to offshore accounts.
The program is called the New Disclosure Opportunity and has similar provisions to the US program. The amnesty program begins on September 1 and runs for six months. During that time, taxpayers have the opportunity to work out agreements to pay back taxes with a reduced penalty rate and little risk of prosecution.
The UK had previously resisted the urge to offer an amnesty program, hoping instead to force tax havens like Switzerland and Luxembourg to make disclosures. However, with government borrowing hitting an all-time high, $21.4 billion last month, they decided to give it a second look. HM Revenue and Customs believe that the initiative could raise as much as $825 million over 4 years.
