FT.com / Personal Finance - IHT avoidance schemes face scrutiny.
As the FT notes:
As part of the new measures to clamp down on tax avoidance, UK residents will also be obliged to tell the British tax authorities when they open certain foreign bank accounts.
The new reporting requirement will apply to UK residents opening accounts in “certain” offshore jurisdictions, with heavy penalties of up to 200 per cent of unpaid tax for those who fail to comply.
Accountants believe the new rule is likely to be applied in tax havens, such as the Channel Islands, a popular financial centre for UK residents.
The Revenue have had enough of cheating in the Channel Islands and Isle of Man. And rightly so. So things are going to get tough for their banks and for their trust companies - because UK residents are going to have to report if they use them.
There's no excuse now for a bank in these places saying it did not know that a customer was tax evading in the UK: I think they will have to ask in future and make sure declaration is made or not provide services.
But I bet they won't do that, all the same. And if they don't it will prove what I've always suspected - that they deliberately want tax evaded funds. If they don't they've certainly been very good at getting them none the less.
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Richard, you are aware that the Isle of Man will move to automatic exchange of information under the EU Savings Directive in 2011, aren’t you? Surely this means that, in respect of bank accounts and any other investments covered by that Directive, there will be no need for these proposals to apply to the Isle of Man, as the UK will already get the information on an automatic basis.
It will be very interesting to see if the UK are brave enough to include Luxembourg in the list of jurisdictions covered. I doubt it, as being a member of the EU seems to allow you to do whatever you want.
Freeborn
Don’t you believe it
This is also about Trusts
But I agree with you on Luxembourg
Richard
But how can you reaport opening a bank account for a trust?
The trustee is in the IOM, and he has to open the account.
The funds are then settled into the trust, the onshore party never opens the account?
also if the UK resident is reporting to the HRMC, why would that mean the IOM bank will ask if the resident has made the declaration? that is the residents obiligation as it has always been.
There has always been some scope that the offshore bank should find if tax evaison is taking place under AML.
It all seems to be a duplication.
If the UK resident is to report the opening, they always should have reported any interest earned in these accounts. If they didn’t report it then, would they now?
If the IOM bank is to report this is already covered even more extensively in the new EUSD disclosures
Creg
It looks likely that any interest in a trust will have to be declared
If that gives rise to quadruplication I don’t care
Getting data is all that matters
And you seek to hide it
My point is simple: if it causes people vast amounts of hassle and complication and cost, that’s just fine by me
It will be nothing like the cost offshore imposes on the UK
And it will slow down offshore activity
Richard
Ahh so it’s about protectionism rather than tax evasion
Prcing out the competition even if there completely reporting compliant.
Well at least that is now in the open.
You do know what Keynes said about Protectionism
“protectionism was a blot upon the efficiency and good sense of this scheme of things”
Creg
You’re being wilfully stupid
It’s about beating crime and making sure it does not pay
I guess you support crime and it pays you
I also presume that’s why you claim to be unable to spot it
Richard
I was referring to your:
“My point is simple: if it causes people vast amounts of hassle and complication and cost, that’s just fine by me. And it will slow down offshore activity”
That is nothing about tax and everything about pricing out the competition.
Richard I’m sure you know that there is already a reporting requirement for offshore trusts created by UK resident and domiciled people – look at this from the HMRC Manual:
“Under IHTA84/S218, where any person, in the course of a trade or profession carried on by them, other than the profession of a barrister, has been concerned with the making of a settlement and knows or has reason to believe
*that the settlor was domiciled in the United Kingdom, and
*that the trustees of the settlement are not or will not be resident in the United Kingdom,
that person must, within three months of the making of the settlement, make a return to the Board stating the names and addresses of the settlor and of the trustees of the settlement.”
So if HMRC think this isn’t enough then all they need to do is strengthen it.
And I don’t know why you don’t believe the Isle of Man is not going to automatic exchange of info under the EUSD – they’ve already publicly announced it – http://www.gov.im/investiniom/ViewNews.gov?page=lib/news/investiniom/isleofmanannounc.xml&menuid=11570
So, with automatic exchange for bank accounts and whatever else comes under the EUSD when it’s redrafted, and a strengthening of the reporting on trusts for UK residents, it looks pretty tight to me. I don’t know why you’re still so sceptical.
@Creg
Crime is not competition
It is crime
@Freeborn Man
Unfortunately people don’t do it
So the power is being strengthened
Penalties will make it work