Various tax information agreements will result in HMRC receiving account holder names and addresses, account numbers, year-end account balances and details of payments made into these accounts. As well as personal accounts information on certain accounts held by entities, such as trusts, controlled by UK people will be provided to HMRC. Whilst most agreements remain to be finalised, and more developments are anticipated the story so far is (latest first):
May 2014 - At the OECD’s annual ministerial meeting in Paris on 6 May 2014, 47 countries endorsed a declaration to automatically exchange tax information, to be implemented by a new single Common Reporting Standard. The 47 countries include Singapore and Switzerland. The complete list is Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Saudi Arabia, Singapore, the Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States.
April 2014 – The UK government negotiates with the EU regarding the Fourth Money Laundering Directive. It would force the disclosure of any individual who ‘exercises effective control’ over trust activities. This could include the settlor, any beneficiary or protector of the trust. As a compromise the UK government intends to restrict the obligations to trusts that hold financial assets – which would exclude for example Will trusts.
April 2014 – HMRC writes to 2,000 taxpayers with overseas bank accounts urging them to come forward if they have undeclared income. The letters are a result of a sampling exercise using HMRC’s “Connect” system. They are an attempt to test and refine HMRC’s risk assessment capability, in preparation for the transfer of vast amounts of taxpayer information regarding offshore accounts.
April 2014 – George Osborne announces plans to give new powers to HMRC to make it easier to prosecute people who evade taxes by hiding money offshore. Currently HMRC must demonstrate that individuals intended to evade tax on foreign income but in future the government wants to be able to bring criminal prosecutions against anyone found to have undeclared foreign income, whether this is due to deliberate actions or not.
HMRC will be in receipt of increasing amounts of information from many countries as a result of international cooperation and transparency. Whilst there are an increasing number of people prosecuted for tax evasion the vast majority of cases continue to be concluded by HMRC for a civil financial settlement. This is expected to continue for those who are coming forward to put matters straight.
The chancellor said HMRC would consult on strengthening the penalties for offshore tax evasion and seek to improve incentives for whistleblowers “it is totally unacceptable for people not to pay the tax that is due and the message will be clear now with this new criminal offence that if you’re evading tax offshore, there is no safe haven and we will find you,” Mr Osborne said.
January 2014 – The UK completes the final automatic tax information sharing agreement such that all British Overseas Territories have now signed IGAs with the UK. The British Overseas Territories are Anguilla, Cayman Islands, Bermuda, Montserrat, Turks & Caicos, the British Virgin Islands and Gibraltar.
October 2013 - The UK signs automatic tax information sharing agreements with Jersey, Guernsey and the Isle of Man. The first information to be exchanged (between Jersey, Guernsey and the Isle of Man with the UK) will be on 30 September 2016. This will be in relation to account details for calendar years 2014 and 2015.