Investors with accounts in the Isle of Man are being offered an opportunity to put their tax affairs in order before the UK and Isle of Man governments automatically exchange information on their accounts.
The two governments have agreed the main body of an automatic exchange agreement, under which a wide range of financial information on UK taxpayers with accounts in the Isle of Man will be reported to HM Revenue & Customs (HMRC) automatically each year. The move forms part of the UK government’s continuing crackdown on tax evasion, including through tax investigations.
Under a disclosure facility operating from 6 April 2013 until September this year, investors with accounts in the Isle of Man will be able to come forward and settle their past affairs before information on their accounts is automatically shared.
It includes guaranteed penalty rates for taxpayers who voluntarily disclose tax liabilities arising from April 1999 to HMRC. The penalties will be ten per cent of unpaid tax due prior to April 2009 and 20 per cent thereafter.
HMRC has warned that when it needs to use information made available under the information sharing agreement, it will be seeking significantly higher penalties.
There is no guarantee against criminal investigation for tax-related offences as part of the disclosure facility and people already involved in tax investigations by HMRC will not be able to benefit from the guaranteed penalty rates.
Chancellor of the Exchequer George Osborne said: “This agreement will greatly enhance HMRC’s ability to clamp down on those who try to hide their money offshore.”
The UK government has signed similar agreements with the US and Switzerland and is also in talks with Jersey and Guernsey. The UK government’s stance on tax evasion means that tax investigations may become more frequent. In the event of a tax investigation – or where a taxpayer may wish to take advantage of a disclosure facility – seeking the advice of the tax specialists at Taxation-Investigation can help to clarify the taxpayer’s position and options, so they can make informed decisions.