Isle of Man / UK Tax Agreement and Disclosure Opportunity
As anticipated the Isle of Man (IOM) has signed a tax agreement with the UK tax authorities. As a result, a range of financial information on UK taxpayers with accounts in the Isle of Man will be passed through to HMRC.
UK taxpayers who have undeclared income earned in the Isle of Man may well hear from HMRC in the not too distant future, but are being given a chance to ‘come clean’ in the first instance. A new IOM disclosure facility has been introduced by HMRC to enable them to come forward voluntarily to disclose undeclared income and the terms are quite favourable..
The key facts of the disclosure facility are as follows:
- The disclosure facility will operate from April 6 2013 until September 2016.
- Restriction of assessable years back to 1999 only. Usual HMRC practice is to assess up to 20 years in cases where they discover a deliberate omission of taxes.
- Restriction of the chargeable penalty to 10% up to tax year 2008/09, and 20% thereafter. Outside of this opportunity, penalties could range from 30 - 100% penalty for deliberate omissions and new legislation allows HMRC to charge a 200% penalty of taxes underpaid where an offshore bank account is held in certain jurisdictions after April 2011.
- There is no assurance given regarding criminal investigations, but given that only persons not currently under investigation can use the facility and full disclosure is required then HMRC would, under its published guidance, ordinarily allow such taxpayers to make a monetary settlement and avoid prosecution.
You would expect taxpayers who do not use the facility but who have a tax position to be exposed to significant penalties and, potentially, criminal investigation.
We have assisted clients in making disclosures to HMRC under all of the recent/current disclosure facilities so please contact us if you would like our assistance in making a disclosure or any related matter.