United Kingdom

Personal Tax Investigations 

With the Government keen to raise revenues in order to relieve financial pressures, the focus on tax collection has increased. HMRC is offering disclosure facilities (such as the Liechtenstein Disclosure Facility and Crown Dependency Disclosure Facilities) to encourage those with undisclosed assets to comply.  International pressure is intensifying for exchange of information.  HMRC has heightened penalties (particularly where offshore assets are involved) and now "names and shames" deliberate defaulters.

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                      Latest personal tax investigations news and information

                        In February and March 2013 Jersey, Guernsey and the Isle of Man announced independently that they were in negotiations with the UK Government to enhance the existing tax information exchange arrangements. There are several components to the package that has been negotiated but they all include (i) an information exchange agreement similar to those being negotiated with the US and (ii) a disclosure facility to enable UK taxpayers to regularise their tax affairs, if necessary. Alternative reporting arrangements are likely for UK resident but non-domiciled individuals.

                         

                        HMRC conducts investigations using Code of Practice 9 (COP9) for cases of suspected tax fraud. A COP9 case follows an entirely different procedure to any other type of HMRC enquiry and it is essential that anyone receiving such an approach from HMRC fully understand what is involved, the importance of making a full and complete disclosure, and obtaining the right advice.

                         

                        COP9 enquiries are more formally known as the Contractual Disclosure Facility.

                      Penalties

                          The new penalty provisions for incorrect tax returns effectively apply for the 2008/09 tax year onwards for personal tax. For companies, the new rules apply for accounting periods commencing on or after 1 April 2008. 

                           

                      Naming and shaming

                        Another strand of HMRC’s strategy for fighting tax evasion is the naming and shaming of offenders - in order to discourage taxpayers from deliberately failing to pay the correct amount of tax that they owe. For periods after 1 April 2010, in addition to recovering any tax, interest and penalty, HMRC can also publish the details of people or companies that have deliberately evaded more than £25,000. The first list was published on 21 February 2013.

                         

                      Exchange of information / offshore assets

                            All the British Overseas Territories with significant financial centres have signed up to the Government's strategy on global tax transparency.  The Cayman Islands, Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands have all agreed to greater levels of transparency with the UK.  Gibraltar has also made the same commitments.

                             

                            The agreements mean that the UK will be automatically provided with much greater levels of information about bank accounts held by taxpayers in these jurisdictions.  This includes names, addresses, dates of birth, account numbers, account balances and details of payments made into those accounts.  It also includes information on certain accounts held by entities, such as trusts.  

                             

                        • Read more: Exchange of information / offshore assets 

                      HMRC enquiries

                        It is clear that HMRC intends to invest significant resources into non-compliance investigations in the years ahead relating primarily to offshore assets and areas of perceived risk in the UK. 

                         

                        HMRC are working with the tax authorities of the US and Australia on data which reveals extensive use of offshore structures to conceal assets by wealthy individuals and companies.  The 400 gigabytes of data is still being analysed but HMRC have stated that the initial results show the use of companies and trusts in a number of territories across the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands.

                         

                        Any person who has an undisclosed offshore bank account or structure should take advice as a matter of priority.  

                        HMRC is additionally looking to target campaigns at specific sectors.  A property campaign which will run until 9 August 2013 is aimed at unpaid capital gains tax on the sale of property in the UK and abroad, particularly second homes.

                         

                      Contact

                      Derek Scott

                       

                      Derek Scott
                      +44 (0)20 7311 2618
                      tax.investigations@kpmg.co.uk

                      Liechtenstein Disclosure Facility (LDF)

                        The Liechtenstein Disclosure Facility (LDF) provides a framework for the disclosure of irregularities connected with overseas assets held anywhere in the world with unique benefits and on favourable terms.

                         

                      Crown Dependency Disclosure Facilities

                      The separate disclosure facilities for each jurisdiction provide a framework for the disclosure of tax irregularities connected with assets held in those jurisdictions on favourable terms.

                       

                      Exhange of information / offshore assets

                      All the British Overseas Territories with significant financial centres have signed up to the Government's strategy on global tax transparency

                       

                      UK Switzerland tax co-operation agreement

                        A tax agreement between the UK and Switzerland was signed on 6 October 2011 by the governments of the UK and Switzerland. The Agreement entered into force from 1 January 2013.  

                        • Read more: UK Switzerland agreement

                      Our expertise

                        • Extensive experience advising clients throughout a COP9 investigation.
                        • Advising clients with offshore assets e.g. bank accounts, offshore trusts and other structures.
                        • Achieving the best possible outcome for clients, including a successful track record of negotiating with HMRC on the level of penalties.
                        • Providing a free initial meeting to discuss the case and potential next steps.
                        • Offering a fixed fee quote, when the level of work to be undertaken is clear, to ensure the client has certainty on the level of professional costs.