Disclosure-Offshore_TaxAgility-Accountants-LondonEarlier this year, Offshore Disclosure Facilities (ODF) were agreed between the UK government and the governments of Jersey, Guernsey, and the Isle of Man, designed to last between April of this year and 30 September 2016.  During this period Financial Intermediaries in these three dependent territories are to be contacting people who they believe may be eligible to participate in the facility.

In the latest update to these agreements in October this year, the governments have now agreed to an automatic and spontaneous exchange of information between the UK and the relevant offshore government, from 2016 onwards.

The Benefits of Offshore Disclosure Facilities

As we wrote back in July regarding the Isle of Man Disclosure Facility (IOMDF), the key benefits of utilising these disclosure facilities for UK taxpayers with investments in Jersey, Guernsey, or the Isle of Man, are numerous, however the most heavily popularised benefit is the fixed penalty of 10% on underpaid liabilities up to 2007-08, with that increasing to only 20% from 2008-09 onwards.  After the ODF period has passed (after 30 September 2016) the penalties may be higher, with a figure of up to 40% being put forward, though this depends entirely on which of the crown dependencies your investments were held in.

An additional benefit is that should you choose to take advantage of any one of these disclosure facilities and disclose your investments in a crown dependency, HMRC will only go back to 6 April 1999 (1 April 1999 for companies), whereas under normal circumstances they can go back up to twenty years.

Spontaneous Exchange of Information Update

In October of this year the government published letter exchanges between David Gauke (on behalf of the UK government) and the Chief Minister of each of the three crown dependencies.

In these exchanges, identical except for details surrounding the double tax agreement in the Isle of Man, David Gauke proposes on behalf of the UK government that the existing tax information exchange agreements should be updated so the new, amended agreements will provide both the UK government and the government of the territory in question the ability to provide an automatic and spontaneous exchange of information between the two governments.

These proposals were accepted unconditionally by all three crown dependencies.

What This Means for You

This new spontaneous exchange of information between the UK and its crown dependencies doesn’t come into force until the Offshore Disclosure Facilities come to an end on 30 September 2016.  Only at this point will the existing tax information exchange agreements between each crown dependency and the UK be updated.

For this reason, taking advantage of these disclosure facilities while they’re in place is of critical importance if you’re a UK taxpayer with investments in, Jersey, Guernsey, or the Isle of Man. The threat has been clearly stated; if you don’t correct your tax affairs in these territories before 2016, HMRC will be able to uncover your unpaid UK tax liabilities via this automatic exchange of information.

Are You Eligible To Use Offshore Disclosure Facilities?

For advice on whether you could benefit from participating in Offshore Disclosure Facilities, contact us today on 020 8780 2349 or get in touch with us via our contact page, and we’ll be pleased to meet with you to discuss your personal situation and your options going forward.

We’ll assess your specific circumstances in order to point you towards the right course of action for you, including looking into whether an alternate facility such as the Liechtenstein Disclosure Facility may better serve your needs.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.