The taxman is now receiving an unprecedented amount of information about offshore bank accounts, assets, companies and trusts held around the globe by UK citizens. HMRC warn that they plan to investigate everyone with an offshore bank account etc, who does not make a voluntary disclosure. The investigations could be on criminal lines.
But as well as the stick of a Criminal Tax Investigation HM Revenue and Customs have created various voluntary Tax Disclosure Facilities, such as the dedicated Worldwide Disclosure Facility and the well-established Contractual Disclosure Facility. These official programmes offer taxpayers the opportunities to clear up historic tax problems on optimum terms: e.g. guaranteed non-prosecution; lower penalties).
Meanwhile, HMRC's offshore Tax Investigation programme continues apace. Delaying coming forward could have serious and unwelcome consequences. If you are already under investigation it is essential that you and your adviser properly address the taxman's concerns and suspicions - in order to avoid a long-running and intrusive enquiry, and to minimise the risk of prosecution.
Over 100 countries so far have signed up to the global Common Reporting Standard (CRS). Under the terms of CRS, financial institutions and professional advisers in those countries are passing information to a common pool (including the UK taxman) concerning: overseas accounts, insurance products, and other investments - including those held through overseas structures, such as companies and trusts. The data includes the identity of the direct owner of the accounts or assets, or details of the ultimate beneficial owner of the entity holding the asset. It includes: names, addresses, dates of birth, balances on accounts, and details of payments made in.
Annually from 2018 the 100+ CRS countrieshave been sharing information with HMRC. Additionally, the G5 countries (United Kingdom, Germany, France, Italy and Spain) now automatically share details about the beneficial ownership of companies and trusts in their countries. And they are working to roll out this programme around the globe. Also, the UK's Automatic Exchange of Information Agreements with the British Crown Dependencies (i.e. Isle of Man, Guernsey, Jersey and Gibraltar) and the British Overseas Territories (including: the Cayman Islands, Bermuda, Montserrat, the Turks and Caicos Islands, the British Virgin Islands and Anguilla) mean those territories all pass HMRC information on financial accounts each year.
The taxman has started to investigate every case where information is received. Some of these investigations are on criminal lines.
Harsh Sanctions since 1 October 2018
Anyone with tax irregularities relating to any offshore issues is now subject to the ultra-harsh Failure To Correct (F2C) penalties. The F2C sanctions include:
- the normal rolling 20 year time limit will still apply to cases involving deliberate errors. But in where there has been a failure to take sufficient care (by the taxpayer or any agent) the usual 6 year limit is now replaced by a rolling 12 year time limit.
- Penalties are a minimum of 100% of the tax lost. And that minimum 100% penalty will only be available in cases of full unprompted disclosures.
- In other cases (i.e. unprompted or incomplete disclosures) the penalties start at 100%, and can go up to 200%, of the previously undeclared tax.
- There could then be a yet further penalty of 50% of the initial penalty (i.e. 300% of the tax!), if an asset was deliberately moved to an alternative offshore jurisdiction in order to avoid detection.
- And worse, in the most serious cases there can be a still further penalty up to 10% of the value of the offshore asset.
- The "naming and shaming" provisions also apply: meaning personal details can be published.
- As usual, interest will be charged at a commercial rate on the late paid tax.
- The total amount of tax, interest, and penalties could easily vastly exceed the total value of the asset itself.
- And the course, HMRC reserve the usual right to prosecute in the most serious cases. Where HMRC achieve a conviction then they will use the Proceeds Of Crime Act to confiscate the so-called "criminal assets".
How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists have a huge amount of experience in dealing with investigations and disclosures in respect of UK residents with offshore bank accounts and other assets. We have the training, knowledge, skills and deep experience to properly manage your offshore disclosure to HMRC. We can reduce the stress and get the best solution for you. And if you are already under investigation our expertise will get you the best possible outcome. HMRC use dedicated specialist investigators to deal with offshore issues: 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 will be getting your details!!
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We specialise in managing all Tax Enquiry, Tax Disclosures & Tax Disputes with HMRC.
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