In the second of his monthly columns, Ernst & Young partner Graham Parrott discusses one of life’s two certainties: taxes IT has always been said that in life there are two certainties: death and taxes.

This week has seen developments both in the UK and Guernsey, which make one of those just a little more certain.

Looking first at the UK, the Inland Revenue there has finally announced its long awaited amnesty, giving people in the country with undisclosed interest in offshore bank accounts the chance to come clean.

Some countries, notably Italy and South Africa, do this regularly. The UK has always been reluctant, because it sends out the wrong message. This is perhaps why it is not called an amnesty but an ‘offshore disclosure facility’. In fact, it actually sounds more like one of the accounts that the UK tax authorities are seeking to track down.

It is also far from a normal ‘amnesty’, in that the claimant is still punished. They still pay all the tax due, plus interest and a 10% penalty. One controversial aspect is the requirement to go back 20 years. How many people keep records that long? By coming forward, the taxpayer avoids a 100% penalty and a full investigation should the Revenue find out some other way in which the interest has been earned but not taxed.

Quite how many people will be able, let alone willing, to come forward by the 22 June deadline is questionable, those who do being prompted by the stick, which accompanies this rather small carrot, of the Revenue’s ability to get details from some UK banks of off-shore accounts held by people in the UK. Last year it was Barclays, now Lloyds TSB, HSBC, HBOS and RBS, with possibly more to come.

The impact in Guernsey is likely to be limited as to the extent it means hidden income is declared – even if the money leaves the island, it is a move that should be embraced. The reality is that this is not business we want. Some of this money would have moved already following the implementation of the EU Savings Directive and more will move as a result.

Some UK banks’ Guernsey branches will be asked to provide records they almost certainly do not keep, but the limited relief under the facility and over a stretched period of time will be bound to reduce take-up. It will be interesting to see how much of the claimed £275m. in additional taxes materialises – the Revenue has a history of overstatement.

This stepping up of pressure on taxpayers is not limited to the UK. Recently the Guernsey tax office was granted wide ranging information-gathering powers. Introduced to deal with our requirements under international agreements but with the opportunity taken for these powers to be applied in the same way to local taxpayers, they are extremely widely drawn – many would even say too wide. However, the tax office is proposing changes to address some of these concerns and whether they go far enough will soon become clear. We must pay what is due, but must also respect the rights of the individual.

And to reinforce the message that we should all pay what we owe – otherwise everyone else has to pay more – this week has seen the launch in Guernsey of a telephone tax evasion hotline for us to report those not paying. Sadly not ’0800 tax dodger’ but the more mundane 747900, or email hotline@tax.gov.gg. It remains to be seen how many calls will be made.

If this does not prove successful, then maybe we should also try an amnesty, although ‘offshore disclosure facility’ may not be the ideal title.