There has never been a better time to ‘come clean’
In February 2013 the Isle of Man signed an agreement with the UK to co-operate with HMRC to ensure UK resident investors are fully compliant with regard to their UK tax affairs
Jersey and Guernsey have now joined them in signing identical agreements.
As part of the agreement, ‘relevant persons’ will be contacted by their bank notifying them of the HMRC disclosure facility which will be available from 6 April 2013 to 30 September 2016
A ‘relevant person’ is anyone who in the period commencing on 6 April 1999 and ending on 31 December 2013 has had a beneficial interest in ‘relevant property’ and has been resident in the UK for UK tax purposes.
‘Relevant property’ has a wide definition and includes:
- an account held with a bank or other financial institution, or
- an annuity contract or cash value insurance contract, or
- a company, partnership, foundation, trust, trust enterprise, other fiduciary entity or estate;
which is held, issued, maintained, founded, settled, incorporated, administered or managed in the relevant territory.
If HMRC discover non-compliance after the disclosure facility ends the penalties will be severe (currently up to 200% of the tax unpaid) and comes with the possibility of a criminal prosecution. Furthermore, HMRC can also now publish the names and details of deliberate tax defaulters if the tax evaded is £25,000 or more.
The disclosure facilities will run alongside the existing Liechtenstein Disclosure Facility (LDF) that has been available since September 2009 and is due to end on 5 April 2016.
The new disclosures are similar to the LDF. However, the LDF offers immunity from criminal prosecution which is not the case for the disclosures offered with Jersey, Guernsey and the Isle of Man. The LDF also offers a more favourable capped penalty of 20%.
The administrative costs of using the LDF may be higher, so anyone wishing to make a disclosure should consider which is the most suitable and it is important that appropriate advice be taken.