By 2016 HMRC will have full details of UK resident beneficial owners of bank accounts, companies and trusts which are located in Jersey, Guernsey and the Isle of Man (the Crown dependencies). They will utilise this information to check that income and gains arising from those assets are reflected in the UK tax returns for those individuals. Any additional tax which arises from a failure to have disclosed any income and gains arising from the assets will be recovered with additional late payment interest and a penalty of between 35% and 112% of the tax due. This is dependent upon the location of the funds and the cooperation given and could lead to a lengthy and intrusive enquiry.
Later this year the financial institutions within the Crown dependencies will write to all of their clients for whom they believe details will need to be disclosed to HMRC. They will advise them of the disclosure in 2016 and outline the opportunity to put any un-disclosed matters right by way of the disclosure facilities which are available for each location. Those facilities offer beneficial terms which include a reduced period of taxation from 1999/00 onwards only (as opposed to a maximum of 20 years normally), and a significantly reduced penalty. Rates of penalty include 10% for all years up to 2008 and 20% thereafter, together with a simplified disclosure process which, for the majority, will result in minimal contact with HMRC. These facilities can be used to address not only any tax disclosure relating to the Crown dependency assets but any other matter also requiring disclosure – again on beneficial terms.
What is clear is that the secrecy and relative inaccessibility of information on UK individuals with assets in the Crown dependencies (and indeed other UK linked overseas territories) will become a thing of the past from 2016 onwards.
Those with undisclosed tax matters are advised to take specialist advice and rectify their position via the beneficial Crown Dependency or Liechtenstein Disclosure Facilities, whichever is applicable, to significantly reduce their tax exposure to HMRC. Those individuals whose affairs are in order but who have interests overseas which will be disclosed to HMRC, need to be prepared to respond to an HMRC challenge and show that their affairs are compliant. With this in mind you should discuss with your tax adviser what proactive action can be taken now to ensure that you have all the necessary material collated and retained to rebuff any HMRC enquiry.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
