HM REVENUE & CUSTOMS has issued letters to individuals it believes hold bank accounts in the Cayman Islands, in order to encourage them to come forward and disclose any previously undeclared income and capital gains.
The letters come on the back of automatic tax information exchange agreements between the UK and its overseas territories, of which the Cayman Islands was the first to sign up.
Financial information on UK taxpayers with accounts in the Cayman Islands will be reported to HM Revenue & Customs automatically every year as part of the agreement.
On the current timetable, UK residents with assets concealed on the island will have until September 2016 to disclose details to the taxman and pay any tax owed to HMRC, as well as a fine between 10% and 20%. While in most cases, the deal will see evaders escape prosecution, HMRC offers no guarantees.
Additional information including data relating to companies and trusts will be shared after 2016.
Crowe Clark Whitehill tax investigations partner Sean Wakeman said: “This New Year resolution by HMRC shows it is extending its reach beyond the low hanging fruit of Liechtenstein and Switzerland, and going global. This could be the start of a modern day crusade, attacking the missing billions from the chancellor’s coffers.
“Account holders are invited to make a disclosure for 20 years which presupposes deliberate behaviour in evading tax. Anyone who may have underpaid taxes should strongly consider making a tax disclosure, with professional assistance, under the government approved Liechtenstein Disclosure Facility, which would immediately limit any liabilities to 13 years, or even to six years in cases involving just carelessness.”
A spokesman for HMRC said: “Those who have declared any offshore income and gains on their UK tax return have nothing to worry about but any one with undeclared offshore income and gains needs to come forward now to avoid punitive penalties and in the most serious of cases criminal investigation”.
Making Tax Digital responses to the consultations expected in January 2017
Further corporation tax cuts and reliefs for cutting-edge tech businesses have been pledged by prime minister Theresa May, ahead of Wednesday’s Autumn Statement
The UK has not followed the global trend for reducing income tax over the past two decades
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes
HMRC receives highest number of complaints in seven years; Deloitte scoops BP and Centrica audits; and corporate reporting under the microscope in our latest Friday Afternoon Live broadcast