Yesterday the Revenue revealed that as a forerunner to the implementation of tax sharing agreements it has reached with the British Crown Dependencies, Guernsey, Jersey and the Isle of Man, it has opened three new disclosure opportunities.
Under the terms of the facilities, UK taxpayers with assets overseas have until the 31 December this year to establish a connection with one of the three jurisdictions and to confirm to HMRC that they intend to use one of the facilities by September 2016.
However, tax experts are warning that the terms of the three new disclosure facilities are unlikely in most cases to be more generous than those offered under the well-established Liechtenstein Disclosure Facility.
Frank Strachan, partner in the tax and tax dispute regulation team at Edwin Coe, said, despite the fact that as each tax year passes the LDF becomes less attractive, it is still often the best choice for clients.
“HMRC should probably have updated these new disclosure facilities to acknowledge the passing of time, but instead they still have the same cut-off point for retrospective taxation of 1999, which is the same as the LDF.
“Not only that, but, under the terms of the LDF, clients are protected from criminal prosecution.”
Mike Down, head of the tax risk and investigation management group at Baker Tilly, said the new facilities “appear to say UK taxpayers subject to any form of investigation are unable to participate, whereas with the LDF only those under criminal or Code 9 investigation (serious fraud) are barred”.
These new facilities and moreover the tax information-sharing deals struck between the UK and its Crown Dependencies — not to mention the “FACTCA type” arrangement announced yesterday between the UK, France, Germany Italy and Spain — are all part of a wider clamp down on tax evasion and “aggressive avoidance”.
In this vein, Fiona Fernie, a partner within BDO’s Tax Investigations team said it was "clear the international community is moving automatic information exchange as standard".
“It will take several years for the full impact of FATCA and similar agreements to be seen in practice, and indeed, detailed information on the terms of the information exchange agreements with the islands is still to be published,” Fernie added.
