Partner Gary Gardner discusses Automatic Exchange of Information ("AEOI") and the consequences of non-compliance.
There is increasing pressure on HM Revenue & Customs ("HMRC") as media and public outrage at offshore and tax havens grow. The government is also under sustained pressure to raise more from those who deliberately go out of their way to avoid contributing their fair share of the tax burden.
Automatic Exchange of Information is broadly recognised as a positive step towards global transparency. Previously tax treaties and mutual assistance directives were onerous, only allowing requests about a specific taxpayer. AEOI involves routine, annual transmission of identification details and financial account data held in one country by residents of another country.
As a result, HMRC will have access to more data than ever before, and investigations are expected within 3-6 months of the first data exchange in September 2016.
HMRC’s compliance strategy includes;
What are the consequences of non-compliance?
- Encouraging voluntary disclosure
- Risk based enquiries into errors, omissions and carelessness
- Civil investigations of fraud (CDF/COP9)
- Criminal investigations
The ultimate sanction for tax evasion using offshore banks accounts and assets remains criminal investigation and potential conviction, and many believe there will be an increase in both criminal and civil investigations.
There will also be the risk of reputational damage as HMRC will have the right to name and shame offenders. What does this mean for those holding offshore assets and interest? Please click here for more information.
Those with overseas assets should check they are complying with any reporting obligations and if not then they should seek specialist advice as to how to make a disclosure and bring their affairs up to date with HMRC.
All disclosures need to be carefully managed to optimise the prospect of HMRC dealing with the disclosure through a civil rather than criminal investigation. However, making a carefully managed voluntary or unprompted disclosure is far more beneficial than waiting for HMRC to challenge your position.
For more information on what this means for you, please contact our tax dispute specialist partner Gary Gardner at firstname.lastname@example.org