June 19th, 2010
The Swiss parliament approved a deal yesterday to help the IRS (the Yanks’ tax authority) get the names of American citizens with secret bank accounts with UBS, according to the Washington Post. Effectively this is an historic weakening of traditional Swiss bank secrecy standards and may be the death knell for offshore banking secrecy.
The sweetheart arrangement will allow the Swiss government to hand over the names and account details of 4,500 U.S. clients of UBS. Account holders will be able to appeal those decisions in Switzerland. The IRS suspects the undeclared accounts are used to hide income and evade tax. The Swiss have already passed on details of some 500 UBS clients. Some of the account holders may be US passport holders but may in fact be living outside the US; including in the UK. It seems highly likely that the taxmen in both countries will be swapping information as part of the “global war on tax evasion”.
Effectively this is an historic weakening of traditional Swiss bank secrecy standards. Last year UBS accepted that it had helped people hide money from the IRS and paid the U.S. Treasury $780 million.
June 3rd, 2010
A landmark tax case involving UK tax residence is moving through all the stages of the UK legal system. The latest court decision against Mr Gaines-Cooper shows the increasing complexities facing anyone having to prove they are no longer Tax Resident in the UK.
Robert Gaines-Cooper has been fighting for years to prove that he became Non – UK Tax Resident when he moved to the Seychelles in the 1970s. The most recent case was a Judicial Review hearing in the Court of Appeal. Unless the onward appeal to the UK Supreme Court is successful, the CoA’s judgement effectively shifts the sands for individuals hoping to break their UK tax residence status.
The verdict significantly redefined the basis on which UK tax residence is decided. It ruled that the well-known ’90-day’ test, which used to appear in leaflet IR 20 (superseded by HMRC 6), has effectively been misunderstood, and only applies to determine whether an individual who had ceased to be UK-resident subsequently becomes UK-resident again. The CoA says that the law has not changed, but that IR20 failed to properly explain this issue in IR20. The judges say a crucial first hurdle has to be cleared by individuals. That is, to show that they have ‘left the UK’ – in the sense of having made a clean break.
How does this affect me?
The ruling only applies to those who had been UK Resident and claim to have left the UK permanently or indefinitely. It does not affect those who have taken up a full-time contract of employment overseas lasting a complete tax year, and whose visits to the UK are less than 90 days a year on average.
Those who want to be able to show they have left the UK permanently or indefinitely must have evidence that they have made a clean break from the UK.
People who left the UK several years ago and followed professional advice – on the basis of the rules set out in the old leaflet IR20 – can now only hope that they have broken UK tax residence. The latest interpretation is retrospective. Some wealthy individuals will have realised gains or received substantial income overseas since they “left” the UK. Those who had an explicit residency ruling from the taxman will probably be safe. Others may be at risk of HMRC starting a Tax Enquiry and making assessments under the “discovery” rules.
If you are confused or worried about your Tax Resident status then you may need specialist tax advice.
Lynam Tax Residence Specialists have decades of experience in dealing with tax residence and domicile issues.
Call Paul Lynam today for an initial free, confidential, no obligation, discussion: 0845 643 9997
March 25th, 2010
The UK taxman won’t have to rely on the jungle drums for news of taxpayers with connections in Belize. The UK signed a Tax Information Exchange Agreement (TIEA) today with Belize, to allow the sharing of tax-related information.
TIEAs allow tax authorities to pass over information relevant to tax matters. This TIEA with Belize provides for a comprehensive exchange of information, to the OECD and international tax standard, regarding taxes of every kind and description.
HMRC now has 16 TIEAs: including Jersey, Guernsey, the Isle of Man and Bermuda. More TIEAs are being negotiated. Since the G20 summit in April 2009, the UK has signed 22 further agreements for information exchange, including with Switzerland, Liechtenstein, the Cayman Islands and Gibraltar. The UK also exchanges information with over 100 countries worldwide under Double Taxation Agreements (DTAs); the provisions of EU Directives and Regulations; and through the Council of Europe/OECD Convention on mutual administrative assistance in tax matters.
How can Lynam Tax specialists help me?
If you have assets or bank accounts outside the UK you may need specialist help. Lynam Tax enquiry experts have immense experience of tax investigations and tax disclosures relating to offshore assets.
For a free and no obligation, private consultation, call Paul Lynam today: on 0845 643 9997
March 13th, 2010
The 2nd UK Tax Amnesty: the New Disclosure Opportunity (NDO) is now formally closed for registrations. But what was it all about?
To take part in the NDO you had to register by 4 January 2009 and send in your full disclosure by 12 March 2010. If you missed the NDO don’t panic; Lynam Tax may still be able to get you registered for an offshore tax amnesty on equally favourable terms. If you did register for the NDO (or its predecessor, the Offshore Disclosure Facility) and are now subject to an enquiry from the taxman, then you probably need specialist help from Lynam Tax Enquiry Experts.
What was the NDO?
The NDO followed the 1st Tax Amnesty in 2007; HMRC’s Offshore Disclosure Facility (ODF). The taxman said this would be the last such chance to clear up historic tax problems on favourable penalty terms. However, the parallel Liechtenstein Disclosure Facility (LDF) is also available to many people – and crucially, not just those with accounts already in Liechtenstein! In fact, the LDF can offer even better terms than the NDO!
The NDO was not a full amnesty; they didn’t let people off back taxes. It was an incentivised tax disclosure scheme, aimed at people with offshore bank accounts or assets. Anyone registering under the New Disclosure Opportunity Tax Amnesty qualified for a lower penalty (usually 10%) compared to the 35-200% they could otherwise face.
The 1st Tax Amnesty
The ODF was launched to help HMRC cope with a massive backlog of information about UK tax residents’ Offshore Bank Accounts. HMRC had information on around 100,000 offshore bank accounts (from only 5 banks: RBS, HBOS, Lloyds, HSBC and Barclays) back in 2007. They then sent formal notices out to get a lot more, probably another 100,000 (from 308 UK banks and financial institutions) plus they hope to get more information from most European banks). HMRC say they had about 40-50,000 ODF disclosures (some of which they are investigating as incomplete – some on criminal lines), and they are now very slowly working through the non-disclosure cases (some with a view to Criminal Prosecution). The ODF disclosures produced about £400m and HMRC have so far collected another £100m from their ongoing enquiries.
HMRC needed to do something about the bulk of the ODF non-disclosure cases and the ‘industrial scale’ of new information – basically tens of thousands of copy bank statements from the offshore banks. Apart from a small number of selected prosecutions HMRC would be faced with long drawn out Civil Investigation of Fraud procedure cases. Hence the NDO.
The 2009 Tax Amnesty (NDO)
This gave an opportunity for anyone with tax irregularities and an offshore bank account or offshore assets to quickly and easily clear up past tax problems, and obtain lower penalties. It involved making a full, voluntary disclosure of past tax irregularities to the taxman.
The New Disclosure Opportunity Tax Amnesty process was straightforward in simple cases. But there were many pitfalls for the unwary or those with more complex tax affairs. Badly managed Disclosures could have the reverse effect; leading to higher penalties and even prosecution.
The New Disclosure Opportunity Tax Amnesty formally started on 1 September 2009 with a Registration process; following which the full disclosure had to be finalised online by 12 March 2010. The timescale was tight, especially as full payment had to be made by the deadline in order to qualify for the reduced penalty. HMRC are not just looking for the tax on the interest earned in offshore bank accounts, but are also seeking tax, interest and penalties on the underlying capital held in the accounts – where it came from an undeclared taxable source. HMRC also expected a full disclosure of any other tax irregularities at the same time. The New Disclosure Opportunity applied to all taxes, including Inheritance Tax.
The penalty for accepted disclosures made under the NDO will be 10% of the extra tax due. However, where HMRC wrote to inform someone about the ODF in 2007, they will face a minimum 20% penalty. From 2011 the maximum penalty in offshore bank account tax investigations will be 200% of the tax due; plus the tax itself and interest!
HMRC will “risk review” all disclosures. If they grade a disclosure as “low risk” they will issue an acceptance letter within four months of the submission deadline (i.e. by 31 May 2010 for paper disclosures, 12 July 2010 for online disclosures). If you disclosed but do not receive “clearance” by 12 July then you may need specialist help. If you did not disclose, but have offshore interests and any undeclared tax liabilites, then you also need expert assistance.
Lynam Tax partners have enormous experience of Tax Disclosures,; the 1st Tax Amnesty (ODF), the NDO; managing HMRC tax enquiries; and are already helping a significant number of people with thesrd offshore tax amnesty the Liechtenstein Disclosure Facility. We can assist you in maximising the benefits offered by the Tax Amnesties and reducing the risks associated with incomplete or non-disclosures: and those cases where HMRC are wrongly investigating your full disclosure.
For an initial free and totally confidential discussion: Call Paul Lynam now: on 0845 643 9997
March 11th, 2010
HSBC admitted today that details of 24,000 customers with Swiss bank accounts have been stolen. The theft potentially exposes large numbers of international clients to prosecution by the tax authorities including HMRC in the UK.
A former IT employee of HSBC Private Bank (Suisse) SA, Herve Falciani, apparently stole the information about accounts opened before October 2006, sometime between late 2006 and early 2007. HSBC says it has contacted the relevant customers and doesn’t believe the stolen data has or will allow any unauthorized access the accounts themselves. However, the theft could leave account holders exposed to criminal prosecution by the tax authorities, including HMRC.
This is the latest in a series of tax haven bank data thefts. In previous cases in Switzerland and Liechtenstein, the information was bought by foreign governments who are using it to track down suspected tax evaders.
If you have an offshore bank account are worried about your tax affairs Lynam Tax can help you. Lynam Tax Enquiry Experts have substantial experience of the key issues and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
January 4th, 2010
Anyone wanting to take advantage of HMRC’s New Disclosure Opportunity (NDO – aka the Tax Amnesty) has to register their intention to disclose by the end of today: 4th January 2010.
The registration process is simple and can be done online at HMRC’s website.
A full disclosure and payment has to be made by the 12th March 2010.
If you have a disclosure to make but miss the NDO then there are other ways that Lynam Tax can help you.
Lynam Tax Enquiry Experts had substantial experience of the first Tax Amnesty (Offshore Disclosure Facility) and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
December 28th, 2009
HMRC have issued a press release urging people with undisclosed offshore assets and undeclared income and gains to jump on board the Tax Amnesty lifeboat, come onshore and come clean before the deadline for registration expires on 4th January.
The taxman’s chritmas warning said:
Taxpayers with undisclosed offshore investments have just one more week to come forward under the New Disclosure Opportunity (NDO).
To take advantage of this final opportunity to benefit from the 10% penalty rate all that has to be done is notify HMRC by 4 January 2010.
Notification can be done online and does not require any tax calculation or payment. HMRC simply needs a few details in order for the taxpayer to be included in the NDO. Once the scheme’s doors are closed those found to have undisclosed offshore assets will be subject to full tax investigation, penalties of up to 100% and in the most serious cases criminal prosecution.
HMRC has issued statutory notices to over 300 banks in the UK requiring them to provide information about customers with offshore accounts. This information is starting to come in and it will be used to ensure that everyone pays the right tax.
The Financial Secretary to the Treasury, the Right Hon Stephen Timms MP, said: “The use of offshore accounts to evade UK tax is illegal. It deprives the UK of tax revenues to fund essential public services and is unfair to the vast majority of honest taxpayers who pay what they should. I urge anyone in this position to come forward and sign up. Time is running out but it’s still not too late.”
Dave Hartnett, HMRC’s Permanent Secretary for Tax said; “From 5 January HMRC will begin to investigate those who were eligible to use the NDO but failed to do so. Penalties could then be increased to 100 percent of the tax evaded – wiping out any advantage from going offshore in the first place. Notification of intention to use the NDO could reduce this by 90%. By 5 January it will be too late so I strongly urge anyone who thinks they have something to tell us to come forward now as HMRC will follow up all undeclared off shore accounts where there is significant tax to pay.”
The NDO process is straightforward in simple cases. But there are many pitfalls for the unwary or those with more complex tax affairs. Badly managed Disclosures can have the reverse effect; leading to higher penalties a Civil Investigation of Fraud enquiry or even prosecution.
Lynam Tax Enquiry Experts had substantial experience of the first Tax Amnesty (Offshore Disclosure Facility) and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
December 14th, 2009
The taxman has set up a new specialist unit to investigate overseas residency claims of up to 5,000 so called high net worth individuals. People who have left the UK for lower tax jurisdictions could find themselves under greater scrutiny from HMRC; and maybe back in the grasp of the taxman.
Until April 2009, tax exiles could usually successfully claim non-residency if they were in the UK for less than 90 days a year. New HMRC guidelines state that tax exiles must prove they have cut almost all connections with the UK. HMRC changed its guidance after winning a case against Robert Gaines-Cooper. He appealed against a tax demand of £30m after the taxman challenged his UK non-resident status. He thought he had successfully moved to the Seychelles in the 1970s. He spent less than 90 days a year on average in the UK. But the taxman persuaded the judges that he was still resident in the UK, partly because he owned a substantial house near London (where he kept his collection of vintage cars) and partly as his son also attended a school in England.
So, the taxman is not just looking at the days you spend here, but your entire lifestyle to see whether you have left for good. Any such Tax Enquiry will focus on lifestyle issues, e.g. homes of family members, children’s schools, club memberships etc. Businessmen commuting to London from tax havens are expected to face particular scrutiny. A number of people who believed they were safely out of the UK tax system could instead find themselves paying 50-70% tax and NIC, plus interest and penalties.
Lynam Tax Residence Specialists have decades of experience in dealing with tax residence and domicile issues.
Call Paul Lynam today for an initial free, confidential, no obligation, discussion: 0845 643 9997
December 9th, 2009
The taxman is bringing in new swingeing penalties (on top of the existing penalties) for anyone who evades tax using an offshore bank account.
HMRC hijacked Alistair Darling’s pre-Budget speech for some PR for the tax amnesties: the New Disclosure Opportunity (NDO) and the Liechtenstein Disclosure Facility (LDF). The chancellor announced the introduction of a new additional and hard hitting penalties regime; which could result in tax evaders facing combined penalties of up to 200% of their unpaid tax (as well as having to pay over the tax and interest). A 40% taxpayer failing to disclose £10,000 of income arising offshore could have to pay the taxman as much as £12,000 plus interest! As the tax and interest can go back up to 20 years that could be a staggering bill compared to the tax that would have been due. Tax evasion can be simply not declaring it on your tax return when you should have done.
For anyone undecided about whether of not to disclose under the current amnesties (whose 10% penalty is looking increasingly generous) the risk equation has been given a big jolt. People using the NDO for insatnce will have to stump up tax plus 10% penalty. For the next year NDO- avoiders wil then have to pay tax plus 30% or more if caught. But by 2011 NDO refuseniks will have to pay tax plus at least 60% if caught! And that’s the lucky ones who don’t get prosecuted!! Suddenly failing to disclose is looking a much riskier bet.
The new measures will also make it a legal requirement for offshore bank accounts to be declared to the taxman at the time they are opened – or presumably straight away if an account is already open. Failure to do so will be another offence in its own right; with yet further penalties. The message is clear from HMRC: take the small carrot now or risk the very big stick!
The offshore tax amnesty processes are straightforward in simple cases. But there are many pitfalls for the unwary or those with more complex tax affairs. Badly managed Disclosures can have the reverse effect; leading to higher penalties; a Civil Investigation of Fraud enquiry; or even prosecution.
Lynam Tax Enquiry Experts had substantial experience of the first Tax Amnesty (Offshore Disclosure Facility) and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
December 8th, 2009
The New Disclosure Opportunity (akaTax Amnesty 2009) is HMRC’s initiative to get people to fully disclose tax irregularities related to offshore bank accounts and assets. We thought you’d appreciate a simple guide to the key stages.
1. The New Disclosure Opportunity is an initiative from HMRC to enable UK taxpayers to clean up their historic tax irregularities by: first registering for the scheme and then going on to make a full disclosure; in return for a reduced penalty of only 10%. It’s only available to people with offshore bank accounts or assets “related” to the tax underpaid. But a parallel informal scheme operates for “onshore” disclosures. There is also a similar scheme called the Liechtenstein Disclosure Facility (see our other pages for details).
2. “Notification of Intention to Disclose” has to be made by 4 January 2010; to receive a “Disclosure Reference Number”.
3. You then have to make a Full Disclosure and payment in full within the disclosure windows: 1/9/09- 31/1/2010 for hard copies; 1/10/09- 12/3/2010 online.
4. The NDO covers all taxes: e.g. Income and Corporation Tax, VAT, CGT, IHT.
5. Agents can make the Disclosure for you but you have to confirm its accuracy.
6. The Disclosure has to cover all relevant years, up to a maximum of 20 years.
7. Accepted Disclosures will get a fixed penalty of 10%. But if you received a letter from HMRC as part of the Offshore Disclosure Facility (tax amnesty 2007) the penalty will be 20%.
8. No penalties are charged where the tax liability is less than £1,000.
9. Full payment of all tax, interest and penalties must be made with the Disclosure.
10. People who don’t disclose now and are then found to have tax liabilities relating to offshore assets/accounts can expect penalties of 30% -100% and run the risk of criminal prosecution.
The NDO process is straightforward in simple cases. But there are many pitfalls for the unwary or those with more complex tax affairs. Badly managed Disclosures can have the reverse effect; leading to higher penalties a Civil Investigation of Fraud enquiry or even prosecution.
Lynam Tax Enquiry Experts had substantial experience of the first Tax Amnesty (Offshore Disclosure Facility) and are helping many clients and their agents with both the current tax amnesties: the New Disclosure Opportunity and the Liechtenstein Disclosure Facilty.
For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
