- Tuesday, 05 March 2013 16:56
- Written by Andy Vessey
Taxpayers given 3 year window to confess their offshore funds
When the Isle of Man government recently agreed an information sharing accord with HMRC, this was the first time such a deal had been reached with a Crown dependency.
Under the agreement the Isle of Man will automatically provide a report of financial information on UK taxpayers who hold accounts on the island, to HMRC on an annual basis.
The agreement, which is part of an anti-tax evasion initiative, will also provide a three year opportunity for those UK residents, with previously undisclosed Isle of Man accounts, to make a clean breast of things. This disclosure opportunity will run from 6th April 2013 – 30th September 2016 but will not be available to those individuals who are already under investigation.
In return for a guaranteed penalty rate of between 10 – 20% on unpaid tax, liabilities going back as far as April 1999 will have to be volunteered. Those who fail to take advantage of the disclosure opportunity will face higher penalties. Those that choose a 'wait and see' policy run the risk of their name and investment details falling on HMRC's desk before they can make a voluntary disclosure at which point all bets are off.
Any person wishing to use the facility will have to calculate and pay the tax arrears at the time of application.
Unlike the Liechenstein Disclosure Facility (LDF), which runs up until 5th April 2016, the Isle of Man concord will not include guaranteed immunity from criminal prosecution. Those with serious tax liabilities, yet untold, may therefore consider the LDF a better option as it offers significantly better terms.
As yet there are no details of how the deal will be administered by the Revenue but it is expected that further information will be announced before April.
Speaking of this latest agreement, Chancellor George Osborne said, “The government is committed to tackling tax evasion and this agreement will greatly enhance HMRC's ability to clamp down on those who try to hide their money offshore.” He is also hopeful that the Channel Islands will follow suit.
With the UK-Swiss agreement expected to swell the Treasury coffers by over £5 billion over the next six years, it is hoped this latest deal will also give rise to substantial tax receipts at little cost to HMRC.