What are the International Agreements to Improve Tax Compliance?

The United Kingdom is amongst over a hundred countries that have entered into Automatic Exchange of Information agreements; so that their tax authorities give each other detailed data about their citizens’ financial accounts and investments -in an unprecedented effort to combat tax fraud and evasion.

There are a number of legal agreements: but effectively they are all being now incorporated into the global Common Reporting Standard.  At today’s date around 100 countries have signed up to the CRS. The CRS forces Financial Institutions (FIs) in each signatory state to obtain and pass on information about account holders who are resident in any of the other Common Reporting Standard members’ jurisdictions.

Reporting under the CRS is being introduced from 2016, with different countries adopting the regime at different times. The UK is one of 52 countries that have signed up to be “early adopters” of the CRS, with reporting requirements introduced for financial accounts in existence from 1 January 2016: see list below.  FIs have to submit specified information to HM Revenue and Customs by 31 May 2017. HMRC will then exchange relevant information with the other participating countries by 30 September 2017. The next wave of countries (48 and rising: listed below) will report under CRS in 2018.  Further jurisdictions are expected to sign up in the coming years. A seeming exception is the United States of America. However, the USA has a similar but separate mechanism: the Foreign Account Tax Compliance Act (FATCA).

Under the CRS any entity which is defined as a Financial Institution has to carry out due diligence on its “Account Holders”.  FIs include banks, companies and trusts. Some entities which are not fully fledged FIs are also be required to carry out some specified due diligence procedures, and have to then report to Financial Institutions.  FIs report the information to the tax authority in their home country.  Data relating to Account Holders who are resident in another CRS signatory jurisdiction will then be given to that jurisdiction no later than 9 months after the end of the calendar year for which the report is made.

What will HMRC do with this information?
HMRC have undertaken to check all of the information they receive from foreign jurisdictions against UK residents’ tax returns. They expect to investigate a significant number of offshore bank account holders; directors and shareholders of offshore companies; and settlors and beneficiaries of offshore trusts – amongst others.  The taxman has stated that he hopes to bring criminal prosecutions against a significant number of people using this information.  A large number of people are expected to be investigated for suspected serious fraud under the terms of HMRC’s Code Of Practice 9.  Swingeing new tax geared penalties and draconian asset value based penalties are being introduced for anyone who has not made a full disclosure of tax irregularities related to offshore matters. HMRC have introduced a mechanism whereby UK residents can disclose any such irregularities: the Worldwide Disclosure Facility.

How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists have vast experience in dealing with voluntary disclosures in respect of UK taxpayers with offshore bank accounts and other assets. We have the training, knowledge, skills, and depth of experience to properly manage your offshore disclosure to HMRC.  We can reduce the disruption and get the best outcome for you.  If you are already under enquiry our experts will get you the best possible solution.  HMRC use dedicated teams of specialist investigators to deal with offshore matters: so you need dedicated, experienced, and committed experts on your side.

To find out how we can help you and for a free, confidential and no obligation discussion, call Paul today on: 0845 643 9997

NB: Don’t Wait – The Taxman could be getting your details!!

The 52 Jurisdictions making first Common Reporting Standard information exchanges in 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Netherlands, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.

The 48 Jurisdictions making first Common Reporting Standard information exchanges in 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, The Bahamas, Bahrain, Belize, Brazil, Brunei Darussalam, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshall Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, Sint Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay, Vanuatu.