Offshore Disclosures

The taxman is getting access to an unprecedented amount of information about offshore bank accounts, assets, companies and trusts held around the globe by UK citizens.  HMRC are warning that they will investigate everyone with an offshore bank account etc, who does not step forward now to 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 Amnesties, 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 favourable terms: e.g. guaranteed non-prosecution; lower penalties). 

In the meantime, HMRC are carrying on with their Tax Investigation programme.  Delaying coming forward is likely 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.

New Information
Over 100 countries so far have signed up to the Common Reporting Standard (CRS). Under the terms of CRS, financial institutions and professional advisers in those countries will pass on information (which will end up with the UK taxman) concerning: overseas accounts, insurance products, and other investments - including those held through overseas structures, such as companies and trusts. The data will include 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 will include names, addresses, dates of birth, balances on accounts, and details of payments made in.

The first 54 countries will be passing this information on to HMRC by the middle of 2017. In 2018 100+ countries will be passing information to HMRC, and annually thereafter. In addition, the G5 countries (United Kingdom, Germany, France, Italy and Spain) made an agreement in April 2016 to automatically share details with each other about the beneficial ownership of companies and trusts in their countries.  They are now working hard on rolling out this pilot programme around the globe. Additionally, 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 that each of those territories had until 30 September 2016 to pass HMRC information on financial accounts for 2014 and 2015. 

The taxman intends to investigate every case where information is received. Some of these investigations will be on criminal lines.

New Sanctions
From 1 October 2018 new ultra-tough legal sanctions start.

There will be a new legal Requirement to Correct (R2C), whereby anyone with tax irregularities relating to any offshore issues will be obliged to disclose them: or face tough new penalties or prosecution.  Anyone who has not regularised their tax affairs by 30 September 2018 will then be subject to the new harsh Failure To Correct (F2C) penalties.  Failure To Correct sanctions include:

  • HMRC will be able to go back to April 1996: i.e. the normal rolling 20 year time limit will no longer apply to those cases.
  • Penalties will be 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) penalties can be more than 100%, and 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.
  • 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".

Escape Clause
The Failure To Correct sanctions will not apply to anyone who has made a full confession (e.g. through the Worldwide Disclosure Facility) by 30 September 2018.

How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists have a huge amount of experience in dealing with voluntary 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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