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 using disclosure facilities (such as the Liechtenstein Disclosure Facility) and increasing the use of its most powerful enquiry weapon, the Code of Practice 9 (COP9), where serious tax fraud is suspected. HMRC has heightened penalties and introduced the concept of naming and shaming for deliberate defaulters. HMRC is also continuing to target specific trades and professions, (campaigns) and undertake enhanced compliance activity in certain sectors (task forces).

 

Anyone with a bank account in Switzerland will need to take action as the UK Swiss Agreement entered into force on 1 January 2013.

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                      Latest personal tax investigations news and information

                        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 obtain the right advice.

                         

                        Since 31 January 2012 HMRC has conducted COP9 enquiries using the Contractual Disclosure Facility rather than the former Civil Investigation of Fraud.

                      Crown Dependency Disclosure Facilities

                      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.

                       

                      Cayman Islands is also in negotiations with the UK Government on similar issues.  HMRC also set out in the 2013 Budget its desire to reach similar agreements with other offshore territories. 

                      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.

                         

                      Swiss banks write to UK account holders

                            A new tax agreement between the UK and Switzerland took effect from 1 January 2013.   The agreement will impact all UK persons with relevant assets in Switzerland, including those who are UK tax compliant.  It is important appropriate steps are taken within the relevant time limits to ensure the desired  outcome.  We have set out some of the key provisions of the Agreement and would be happy to discuss them in more detail.  

                             

                        • Read more: UK Switzerland Agreement
                           

                            • For those with irregularities in their tax affairs, another option is the Liechtenstein Disclosure Facility (LDF) which can be a cheaper and more certain route than both a formal investigation or the UK Swiss Agreement; principally that liabilities may be restricted to the period from 6 April 1999 in the LDF rather than the normal 20 years in a voluntary disclosure.  
                             

                        • Access details on the Liechtenstein Disclosure Facility

                      Other HMRC investigations

                        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. 

                         

                        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

                      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.  

                      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.

                       

                      Tax Settlements and Investigations

                        KPMG can also assist companies, partnerships, employers, trustees, solicitors, accountants and other advisors navigate through the demanding process of an HMRC investigation.

                         

                      Our expertise and specialisms include

                        • 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.