In a move which could virtually kill off International tax evasion, the UK is in the advanced stages of planning to force all its so-called Crown Dependencies and Overseas Territories to report all details of bank accounts held by UK citizens; according to the International Tax Review – which claims to have seen a leaked government document. The report, by the UK’s International Development Committee, apparently shows that HMRC is going to copy America’s Foreign Account Tax Compliance Act (FATCA) for all of its Crown Dependencies and Overseas Territories; such as the well-known tax havens of Jersey, Bermuda, the Cayman Islands, Gibraltar and the British Virgin Islands.
The draft legislation will require banks in each jurisdiction to automatically give the UK government information about each reportable financial institution account (e.g. bank accounts). This will include full identification details of all beneficial owners of the offshore bank accounts, even where accounts are held in the name of trusts, companies, foundations etc. Banks will have to provide the account number and further details about the account – such as the balance at the year-end. The legislation is based on the American model: which has required all banking businesses, which have a branch in the USA, to report details of any bank accounts held by any of its citizens anywhere in the world.
The UK FATCA will essentially mean that UK citizens will not be able to have secret accounts in any of the Crown Dependencies or Overseas Territories. This follows hot on the heels of similar moves whereby secretive accounts are no longer possible for UK citizens in Liechtenstein, Switzerland or any of the EU countries. The following is a full list of the countries which will have to report. Crown Dependencies: Isle of Man; Channel Islands: Jersey, Guernsey (and its dependencies, e.g. Sark). Overseas Territories: Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; British Virgin Islands; Cayman Islands; Falkland Islands; Gibraltar; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; St Helena and the St Helena Dependencies (i.e. Ascension and Tristan da Cunha); South Georgia and South Sandwich Islands; the Sovereign Base Areas of Akrotiri and Dhekelia; and The Turks & Caicos Islands.
The taxman in the UK has made it absolutely clear that he intends coming down hard on tax evasion linked to offshore bank accounts. In recent years HMRC have signed agreements to obtain information from previously secretive jurisdictions, e.g. the Liechtenstein Disclosure Facility and the Swiss Tax Agreement. Additionally, they have obtained information about offshore accounts held with over 100 offshore banks: and hundreds of UK taxpayers are now receiving letters from the specialist HMRC Risk and Intelligence Service and the HMRC Offshore Coordination Unit. Penalties for undeclared tax linked to offshore bank accounts can now be as high as 200% of the tax.
What does this mean for me?
If you have an offshore bank account then at some point in the next few years it is extremely likely that you will be subject to a tax investigation. If you have undeclared income (including investment income) linked to the offshore account then you could face a very intrusive tax investigation; extremely high tax-geared penalties; and even prosecution, confiscation orders and prison. HMRC is rapidly closing the net on offshore tax evasion. Now is the time for people to put their house in order while they still have the opportunity. HMRC are currently offering generous terms under their various tax amnesties. This can include a guarantee of non-prosecution and very low penalties.
How can Lynam Tax disclosure experts help me?
Lynam Tax Experts have an enormous amount of recent experience assisting people with offshore bank accounts. We can help you obtain the best possible outcome with HMRC, including a guarantee of non-prosecution and very low penalties.
To discuss your affairs in complete confidence please call Paul Lynam now on 0845 643 9997