December 1st, 2011
HMRC have renegotiated some of the terms of the Liechtenstein Disclosure Facility. One major change is the introduction of the new Confirmation Of Relevance.
The Liechtenstein Disclosure Facility (LDF) is a ground-breaking tax agreement between HM Revenue & Customs (HMRC) and the Government of Liechtenstein. It’s a unique time-limited opportunity to declare previously hidden tax liabilities to the taxman on highly advantageous terms, which have never previously been on offer. Confusingly for some, participation in this one true tax amnesty is not limited to those with a prior connection to Liechtenstein. By 30 September 1,721 UK residents had registered for the LDF. It is understood that the vast majority of them did not previously have a connection to Liechtenstein.
HMRC have renegotiated some of the terms of the so-called Memorandum of Understanding with the Liechtenstein government. One of the conditions for using the (LDF) in order to disclose unpaid tax is that you must already own or acquire qualifying assets in Liechtenstein. There has been some dispute with HMRC as to whether certain assets acquired in Liechtenstein were sufficient to qualify the UK resident to participate in the LDF. In order to overcome this uncertainty, financial institutions in Liechtenstein will now have to issue a certificate, known as a Confirmation Of Relevance, to anybody who acquires a qualifying asset in Liechtenstein. From 1 December 2011 without a Confirmation Of Relevance it will not be possible to register for the LDF.
This is an unusual and confusing area where specialist advice can be essential.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
November 5th, 2011
HMRC have set up a special team to deal with their investigations into the 6,000 HSBC Switzerland bank account holders on whom they have obtained information. The Birmingham based team is called The Offshore Coordination Unit.
The taxman has recently begun a programme of writing letters to all 6,000 UK resident HSBC Swiss bank account holders on whom it has information. These letters will go out in waves. The first wave has already been sent. UK residents with HSBC Swiss accounts will have 30 days, from the date of the letter, to come forward and notify HMRC of their intention to make a full disclosure. Once the 30 days have elapsed the taxman will commence investigations. All these investigations will be carried out by the Offshore Coordination Unit. The initial staffing levels have been set at 25 experienced and technically trained tax inspectors. It is expected that the complement of staff will increase significantly as the programme progresses.
Anyone who comes forward voluntarily before receiving one of these letters could qualify for the very generous terms of the so-called Liechtenstein Disclosure Facility. No announcement has yet been made, but there are suggestions that recipients of the Offshore Co-ordination Unit enquiry letters will not be allowed to participate in the generous terms of that Tax Amnesty.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
November 4th, 2011
The Organisation for Economic Co-operation and Development (OECD)’s meeting this week in Paris was told that global cooperation to share information, particularly regarding offshore banking, could reduce tax evasion and bring in £62bn in extra tax revenue.
It was claimed that a survey by the OECD, of 20 countries, showed that recent steps to detect and deter tax evasion had resulted in extra tax being paid of US$ 14bn, by approximately 100,000 people; with hidden assets worth around US$120-150bn. The OECD said: “That is just the tip of the iceberg. There is probably $1tn in assets held offshore.”
All G20 governments agreed to a multilateral convention to tackle tax evasion. Previously only 7 of the G20 countries, including the UK, had signed up to the agreement to provide “mutual administrative assistance” in tax matters. The new concordat includes automatic exchange of information on request, multi-jurisdictional simultaneous tax inspections, and cross border co-operation in the collection of tax.
Since 2009 700 separate “mutual administrative assistance” agreements have been signed. Countries have changed laws to allow access to previously secret information, including in relation to banks. The G20 now expect many other countries to sign the convention.
The OECD’s secretary general said: “We have taken a major step forward to improve global tax cooperation”.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
October 31st, 2011
The taxman’s newly formed “Affluence team” has announced its first major project: targeting wealthy Brits who own land and property abroad. It is rumoured that HMRC are saying they suspect about 350,000 UK tax residents, with earnings over £150,000 a year, have income from properties abroad which they have not declared on their tax returns.
The Offshore Property Project will be carried out by a new 200 strong team of tax investigators and deep technical specialists working in the Affluence Team; which itself was only created on 18th September this year. The new “Affluence Team”: was set up to tackle tax avoidance and tax evasion by those high earners (i.e. people whose personal wealth is more than £2.5m) who are not quite wealthy enough to be dealt with by HMRC’s High Net Worth Unit: which deals with the tax affairs of the so-called HiNWIs – about 5,000 UK tax resident individuals worth more than £20m.
The Offshore Property Project team will bring together specialists from various parts of HM Revenue and Customs. They will also be using cutting-edge computer technology. HMRC has invested heavily in sophisticated data-mining software. These web robots, or spiders, can trawl through publicly available information, and the huge volumes of information already sent in to HMRC, and link that back to the taxpayer’s own electronic account with the taxman. The computer will then interrogate, compare and cross reference the data. This will enable the taxman to identify British taxpayers who own land abroad. At same time new and innovative risk assessments techniques will automatically check to see whether the properties appear to be legitimately affordable (i.e. from declared income), and whether any rents are being declared. Recent property disposals will also be checked against returns (or non-returns) of capital gains.
This new team is part of the government investment of £917m announced in the last Spending Review, aimed at reducing the so-called “tax gap”; over the next four years. Announcing this new unit the Chancellor of the Exchequer said: “With HMRC’s increased capability and expertise…there is no hiding place for tax cheats.”
The Offshore Property Project will apparently soon be followed by further projects, e.g. targeting commodity traders and people with offshore bank accounts.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
October 13th, 2011
HM Revenue & Customs announced today that they will very shortly be writing to UK resident individuals and organisations that have bank accounts with the Swiss arm of HSBC in Geneva, and who may not have declared all of their income or gains to the taxman.
Last year HMRC obtained information under a tax treaty. It has been rumoured that an employee of HSBC had stolen data relating to 6,000 UK residents who had bank accounts with HSBC Switzerland. This information, along with other data, had been sold to the German tax authorities. It was then passed to HMRC in the UK. The information relates to bank accounts held in the Geneva branch of HSBC by more than 6,000 UK individuals, companies, trusts and other entities: who held either bank accounts or other financial investments in Geneva via HSBC.
Last year HMRC began its investigations into these account holders in earnest. About 500 UK citizens were taken up for investigation under the Civil Investigation of Fraud (CIF) procedures using the HMRC Code of Practice 9 (COP 9: Cases of Suspected Serious Fraud). These investigations were carried out by the elite Specialist Investigations arm of HM Revenue and Customs. In addition to those serious civil investigations about half a dozen individuals were arrested, and are now been subject to criminal prosecutions. HMRC have promised that further prosecutions will follow shortly.
It is believed that a large number of individuals have come forward to make voluntary disclosures to HMRC. Many of these have been able to obtain a guaranteed non-prosecution by using the Liechtenstein Disclosure Facility (LDF). Despite its name the LDF, as it is known, is available to almost all UK residents who held offshore bank accounts at the relevant date; even if there was no prior connection to Liechtenstein itself.
HMRC is now adopting a carrot and stick approach. It is writing to the 6,000 people who have not come forward so far. It is offering them a last opportunity to make a voluntary disclosure. The taxman states that there will be a limited ‘window of opportunity’ for such people to step forward. After that HMRC will commence investigations in earnest. The taxman has stated that he is seriously considering launching criminal investigations into large numbers of those who do not come forward. People who do not come forward now to make voluntary disclosures and are subject to civil investigations could face: penalties of up to 200% of the tax lost; “naming and shaming”; and placing on the Managing Deliberate Defaulters programme for the next five years.
The work will be led by HMRC’s new Offshore Co-ordination Unit, which becomes fully operational next month. This all follows hot on the heels of a new tax agreement between UK and Switzerland – signed this month – which will give HMRC access to secret Swiss bank data for the first time ever. That will be in addition to the information they already have regarding the HSBC accounts.
The taxman was keen to emphasise that: “This is not an amnesty. There are no special rates of penalty or interest for those who come forward voluntarily. This is an opportunity for those who have made errors in past returns to correct them”.
However, HMRC has also accepted that anyone who comes forward prior to receiving Code of Practice 9, or being taken up for criminal investigation, will still be eligible to register for the Liechtenstein Disclosure Facility. This is a proper tax amnesty. It limits the number of years which HMRC can collect tax for, and offers a drastically reduced penalty, as well as a guaranteed immunity from prosecution, along with a simplified disclosure regime.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
October 12th, 2011
The landmark tax agreement between the UK and Switzerland was signed in London today. HM Revenue & Customs expect it to bring in billions of pounds of extra tax to the UK.
The Swiss Tax Agreement means that UK taxpayers’ funds in Switzerland face huge one-off deductions to settle past tax liabilities: of between 19% and 34%.: where the account was open on 31 December 2010 and is still open on 31 May 2013. This deduction will settle income tax, capital gains tax, inheritance tax and VAT liabilities in relation to the funds in the account. Those charges will not apply if the taxpayer authorises a full disclosure of their affairs to HMRC. However following any such disclosure, HMRC will seek unpaid taxes, interest and penalties directly from the taxpayer.
Then, from 2013, there will also be a new Withholding Tax (of 48% on investment income and 27% on capital gains): which will apply to anyone who has not told the taxman about those assets.
The Swiss Tax Agreement includes the following provisions:
- HMRC has got a new power to discover whether an individual UK resident has an account in Switzerland, and to get details about those bank accounts;
- Anyone who has previously been challenged by HMRC and failed to disclose Swiss assets, anyone actively undergoing a tax investigation or after the date the treaty comes into force, and anyone convicted following an HMRC criminal investigation, will not be able to benefit from the clearance of past tax liabilities;
- A new UK-Swiss joint commission will conduct a “programme of audits”, to ensure the Swiss banks’ compliance with their obligations;
- The Swiss will collect data on the destination of any funds withdrawn from Switzerland following the announcement of this agreement, and will share that data with the UK.
- The agreement is expected to come into force in 2013, following scrutiny by the UK Parliament and after ratification in Switzerland.
- UK residents who are non-UK domiciled are outside the scope only they claim the remittance basis (and pay the Remittance Basis Charge: currently £50,000), and have their non-domicile status certified by a professional (e.g. an accountant or tax agent that is a member of a recognised body. Nb: Lynam Tax Ltd is a member firm of both the ICAEW and the ACCA).
The chief tax inspector said: “The world is shrinking fast for offshore tax evaders and this agreement will ensure that we know where money that flees Switzerland is heading. We won’t be far behind.”
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
September 4th, 2011
HMRC’s Specialist Investigation unit may be about to launch a fresh wave of attacks on UK citizens with bank accounts held with the Swiss branch of HSBC, according to a report by Jamie Dunkley in The Telegraph.
The taxman bought stolen data from a former employee of HSBC Switzerland. So far they have written approximately 800 letters to clients of the bank based in the UK. Each of these informs the account holder that they are under investigation for suspected serious tax fraud, and includes the issue of Code of Practice 9.
HMRC have been trawling through the full records that they obtained. It is believed that they have the names and bank details of around 7,000 UK citizens, and are about to issue a further round of Cop 9 letters.
Specialist Investigations and COP 9
Specialist Investigations is the elite investigatory arm of HMRC. Code of Practice 9 (Cases of Suspected Serious Fraud) is issued in cases where the taxman believes he will recover more than £500,000 in tax interest and penalties. Taxpayers who do not fully cooperate, and fully disclose, under the terms of COP 9 frequently face criminal prosecution. Code of Practice 9 investigations are highly intrusive. Specialist investigations frequently use their information powers to approach 3rd parties such as banks and business suppliers and customers.
What does it mean for me?
Any UK citizen with a Swiss HSBC account should consider making a pre-emptive disclosure to HMRC. If they do this under the terms of the Liechtenstein Disclosure Facility (LDF) then they will be guaranteed non-prosecution, the tax collected will be restricted to a maximum of 12 years, and the penalty kept to a token 10%. Anyone who delays in making a disclosure risks prosecution, or the issue of Code of Practice 9. If COP 9 is issued, the individual is them debarred from taking part in the LDF and HMRC can go back 20 years, and claim penalties of up to 200% of the tax, as well as interest.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
August 31st, 2011
Hot on the heels of the breakthrough agreement with Switzerland HMRC is now attempting to get a similar agreement with other so-called tax haven jurisdictions, in particular the British Virgin Islands and Panama.
Accountancy Age reports that a senior official at HMRC has informed them that talks are now going on with the British Virgin Islands and Panama, with a view to getting a similar deal to that brokered with Switzerland recently. Under that deal British citizens with accounts in Switzerland will have to do disclose, or face hefty withholding taxes. HMRC will also be given significant access to information on hundreds of accounts each year held by UK residents in Switzerland.
The report that HMRC are in serious negotiations with other tax haven countries comes as no surprise. In the last 12 months HMRC has entered into over 20 tax information exchange agreements with countries that had previously been regarded as impenetrable tax havens. They have now entered into information sharing and disclosure agreements with Liechtenstein and Switzerland; both previously regarded as bastions of secrecy. Panama and the BDI are now being particularly targeted because they have thriving company and Foundation formation services businesses, but have a minimal level of public reporting.
David Gauke, Exchequer Secretary to the Treasury, said: “The message is clear: there is no hiding place for tax cheats.”
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
August 24th, 2011
The UK has done a deal with the Swiss government that tears up the rulebook on the fabled Swiss banking secrecy. From 2013 UK taxman will collect tax from Swiss bank accounts held by UK residents: and, just as crucially, get complete access to all Swiss bank details of selected UK citizens.
HMRC’s chief tax inspector has brokered a deal that rings closing time on Switzerland as a haven for tax dodgers. From 2013 anyone in Britain with a Swiss bank account will face:
- Having to allow the bank to reveal the details of the account to HMRC, and then (if HMRC decided not to prosecute) having to fully disclose all tax irregularities for up to 20 years, and then pay penalties (up to 200% of the tax), and interest; or
- Having the full balance of the account taxed at between 19 to 34%: dependent on the size of the deposit, the age of the accounts and previous withdrawals.
- Whichever of those two routes is taken then also, from 2013 onwards, a “Withholding Tax” will apply: at 48% on all interest, 40% on dividends, and 27% or capital gains.
- If the disclosure route is not taken, and HMRC subsequently investigate, it seems unlikely that any credit will be given for the 34% “Balance Levy”, or for any Withholding Tax (as that is not covered by the UK-Swiss Double Taxation Agreement).
- The taxman will give the Swiss 500 names of British residents each year, and the Swiss will provide full details of any accounts, including income and balance transfers, to HMRC. No consent of the account holder is required.
- Information provided by Switzerland is likely to lead to a significant number of criminal prosecutions.
- HMRC are actively pursuing similar deals with other tax havens in order to close down any boltholes. They have signed 20 Tax Information Exchange Agreements with tax haven countries in the last year alone.
What does it mean for me?
If you have a Swiss bank account you need to urgently consider your options now. If you do nothing: in 2013 34% of the balance will disappear. Thereafter 48% of all income will be deducted. You could still be investigated. You may not get any credit for the levies deducted by the Swiss. You could be prosecuted, go to jail and have your assets confiscated. Instead of suffering a 34% levy you could allow the Swiss bank to reveal your details to HMRC. Again this would risk prosecution. If HMRC decides to carry out a civil investigation of fraud you could face paying tax going back 20 years, plus interest for the whole period, plus penalties of up to 200% of the tax.
Is there a better way to regularise my tax affairs?
Yes. HMRC are offering a tax amnesty for Swiss bank account holders, whereby you only pay tax back to the tax year 2000 with a fairly token 10% penalty.
How can Lynam Tax Enquiry Experts help me?
Our Tax Disclosure specialists have years of experience of tax investigations and disclosures involving offshore bank accounts. We can assess your particular situation and advise you of the optimum route. We can manage your disclosure, and guide you to a successful outcome – as we have done for many satisfied clients.
To find out more, and for a fully confidential and initially free consultation: phone Paul Lynam now, on: 0845 643 9997
July 18th, 2011
Tax authorities in America are investigating if banking giant Credit Suisse to assisted US citizens to evade tax; according to a report by the BBC.
This is in addition to the ongoing investigation into UBS. Credit Suisse (whose parent company is based in Switzerland) says it has been told it is a “target” for investigation, but claims this is part of a “broader industry inquiry”.
Four Credit Suisse bank employees were indicted this February for helping taxpayers hide money in secret bank accounts.
The BBC also reports that in June 2010 Switzerland changed the law to allow Swiss banks to share customer details with US tax authorities. It is not yet known if the IRS is passing on this information to HMRC in the UK and other fiscal authorities.
The UK and Switzerland are known to be very close to agreeing a new deal on information sharing also. From this year any evaded tax in the UK linked to offshore bank accounts can incur penalties of up to 200% of the tax, plus interest. HMRC has also recently announced an increase in prosecutions linked to offshore bank accounts.
Anyone with underpaid tax and an offshore asset can still benefit from the very generous terms of the Liechtenstein Disclosure Facility: a UK Tax Amnesty which (despite the name) does not require any prior connection to Liechtenstein.
Worried about an offshore bank account?
Lynam Tax Enquiry Experts have substantial experience of the key issues. We are helping many clients and their agents with the current tax amnesty.
*For a free, private, no obligation consultation, don’t delay, call Paul Lynam today: on 0845 643 9997
