Offshore disclosure for non-residents

Offshore disclosure for non-residents

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We have clients with an offshore account opened in 1997 (interest ranges from £500 to £3,800 p.a.). They have both been resident in Spain since February 2004 and intend to stay there permanently.

The husband is British, but the wife is Dutch (although she lived in the UK for at least 10 years before moving to Spain). Both have continued to receive some UK income and have continued to complete UK tax returns since their move to Spain as they were advised that this was preferential from a taxation point of view. No offshore interest has been included on their tax returns.

They have received a letter from the offshore bank advising that, as the account was linked to a UK address in the last 6 years, they should consider disclosing to HMRC.

Do our clients need to take advantage of the offshore disclosure facility in this instance?
Anon

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By User deleted
20th Jun 2007 11:37

Possibly
Depends on a number of things.

2 different periods - pre Feb 04 ( when I believe they were UK resident) and post Feb 04 (when not UK resident)

Pre

If Mrs is not domiciled in the UK (likely) then she is only taxable on the Spanish interest if she remits it to the UK

As UK domicile (I assume) Mr will be subject to tax on his worldwide income while resident. If his Spanish accounts were not included in his tax returns while resident then his Return was wrong and there may be a loss of tax.

This will depend on what rate of tax he would have paid on the interest (i.e. 10%, 20% or 40%) less credit for any Spanish tax chargeable on him.


Post

Assuming they are both non-resident (e.g. less than about 90 days in UK a year) then they should only be taxable in the UK on UK income, so not these bank accounts, but you need to check carefully the rules that apply if a non-resident claims a UK personal allowance.


So, the simple answer is, this is far from simple. You need to work very quickly and work out what the loss to Gordon Brown is. If you think a declaration may be needed, get your client to register now.

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By User deleted
20th Jun 2007 12:25

Section 19A, TMA 1970
If this turns into a Discovery Enquiry, and any documents are brought forward for inspection, presumably they will be available only in Spain. Are HMRC empowered to demand documents are forwarded to them?

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