The strategy involves stronger action, both at home and internationally. The specific Government objectives are that:
- there should be no jurisdictions where UK taxpayers feel safe to hide their income or assets from HMRC;
- would-be offshore evaders realise that the balance of risk is against them and voluntarily pay the tax that is due;
- those who do not come forward are detected and face vigorously enforced sanctions.
Central to this strategy is reducing the opportunities to evade tax by the greater sharing of information between governments. This is a process which has already begun and continues.
In 2009 an agreement was concluded with Liechtenstein which provided for an information exchange agreement and a disclosure facility to enable UK taxpayers to regularise their tax affairs (the Liechtenstein Disclosure Facility – ‘LDF’).
In 2011 an agreement was made with Switzerland which provided for the effective taxation of UK residents with accounts held in Switzerland by a combination of taxes on both income and capital and the provision of information.
In 2012 the Government signed an enhanced automatic exchange agreement with the USA, the first of its kind in the world.
Agreements were signed in February and March 2013 with the Isle of Man, Guernsey and Jersey. These provide for an enhanced reporting of information, a revised Double Tax Treaty and a disclosure facility, similar, but not identical to the LDF.
On 9 April 2013 the Government announced that it had agreed with France, Germany, Italy and Spain to develop and pilot tax information exchange. The Government is also looking to conclude agreements in future with other jurisdictions such as the Cayman Islands. On 10 April 2013 Luxembourg announced that it would ease the secrecy surrounding its banks and would implement rules on the automatic exchange of bank account information with its European partners from 2015.
With these greatly increased flows of information comes an increased likelihood of evaders getting caught. This is increased further by the extra staff, resources, technology and analysis tools which HMRC is bringing to bear on this information.
HMRC want offshore evaders to come forward voluntarily and where appropriate use the new disclosure facilities to clear up their tax affairs. These are not amnesties because taxpayers still have to pay the tax they owe plus interest and penalties, but they do provide an opportunity for UK residents to regularise their tax affairs on unique and favourable terms. For example, the penalties can be considerably lower than if an individual does not come forward voluntarily (10% as opposed to a maximum of 200%) and some tax liabilities for earlier years may fall away.
Those who do not take advantage of these opportunities and continue to evade tax will expose themselves to the strongest sanctions including the possibility of criminal investigation and the publishing of names of the most serious evaders
In the light of this many people with undeclared offshore assets will now want to review their position. The advice is very much to come forward voluntarily now and, where appropriate, make use of one of the disclosure schemes. KPMG has extensive experience in making these disclosures and can advise on this. An appropriate disclosure can provide a resolution to long standing tax problems and provide finality for the past including immunity from prosecution. A settlement of the past enables future compliance and provides peace of mind.