Gabelle Tax Analysis: Isle of Man account holders details to be passed to HMRC
HM Treasury announced on 7 December 2012 that it will soon be able to obtain details of Isle of Man bank accounts held by UK residents.
The UK and Isle of Man are about to sign an enhanced tax information exchange agreement to allow the automatic exchange of information on a reciprocal basis. This will coincide with the signing of the enhanced tax information exchange agreement between the US and the Isle of Man governments to implement the US Foreign Accounts Tax Compliance Act (FATCA) for the overseas accounts of US citizens.
The Treasury has also confirmed that it is in discussions with the Jersey and Guernsey governments to agree the automatic exchange of information on a reciprocal basis.
UK residents with offshore accounts should be aware that HMRC will check the information obtained under these agreements against their records to see whether foreign income and/or gains have been declared. If HMRC perceive there is a risk that not all the income and/or gains have been declared it is highly likely that HMRC will instigate a civil investigation into the person’s tax affairs. In the most serious cases, HMRC may consider it appropriate to start a criminal investigation to determine whether tax has been evaded.
Persons holding bank accounts in either the Isle of Man, Jersey or Guernsey that have not previously been disclosed to HMRC should seek specialist advice to determine whether a voluntary disclosure should be made to HMRC. In most circumstances it may be more beneficial to utilise the Liechtenstein Disclosure Facility to disclose the untaxed income and/or gains. The person does not need to have an existing connection with Liechtenstein.