The UK Government continues to battle tax evasion and David Cameron used the G8 summit last week to announce further agreements aimed at targeting evasion by UK residents with overseas assets.
The British Overseas Territories (the Cayman Islands, Anguilla, Bermuda, the British Virgin Islands, Montserrat, the Turks and Caicos Islands and Gibraltar) announced last week that they had reached automatic exchange of information agreements with the UK, France, Germany, Italy and Spain. Further, on 17 June 2013 the Crown Dependencies (the Isle of Man, Jersey, Guernsey) and the Overseas Territories agreed to join the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This means that the UK together with other participants of the Convention will be provided with greater levels of detail on bank accounts and the beneficial owners of overseas assets. These commitments signal a major shift in attitude by the overseas territories towards the automatic exchange of information.
As expected, David Cameron has also announced that the G8 countries have signed up to the automatic exchange of information between tax authorities, which it is hoped will be the new global standard.
Separately, Singapore, which is considered to be new destination to shelter offshore funds, announced on 14 May 2013 that it will expand the list of countries with which it will exchange tax information, increasing the number of countries from 41 to 83. Singapore also signed the OECD’s Convention on 29 May 2013. It has also been reported that banks in Singapore have until 1 July 2013 to identify accounts that they suspect hold tainted funds and where necessary close the relevant accounts. After this date, it will become a criminal offence to handle the proceeds of tax crimes in Singapore.
It was further announced by HMRC on 9 May 2013 that 400gb of data on offshore structures is currently being analysed. The data contains the names of more than 100,000 people and 120,000 entities, and with financial data going back nearly 30 years. It is understood that 100 UK residents had already been identified as the target for further HMRC investigation.
There are now very few places to ‘hide’ offshore assets and the need to sort out the past before HMRC starts an investigation is becoming more and more pressing. The good news, of course, is that there are now a number of specific disclosure facilities which clients can use to regularise the past on favourable terms. For example, the LDF offers immunity from prosecution; the disclosure covers only 10 years; and the penalty is limited to 10% for tax years 1999/00 – 2008/09.
If you would like to discuss the implications of the most recent advances in the automatic exchange of information or learn how to make a full and complete disclosure to HMRC please contact out TaxDesk on 0845 490 0509 and ask for John Hood.