British FATCA Ready To Net More Offshore Centres

The British version of FATCA is gathering pace as yet another formerly secretive financial centre has signed up to the tax information sharing agreement.

Now, Britain has FATCA-style agreements with the Isle of Man, Guernsey and Jersey – and the government promises to pick off other former UK territories and dependencies in the fight against the wealthy managing their taxes in secret.

Other financial centres on the list are likely to include The Cayman Islands, Turks and Caicos Islands and British Virgin Islands.

Britain has stood shoulder-to-shoulder with the US in overturning financial centres that made money from promoting tax avoidance.

The US has controversially legislated the Foreign Account Tax Compliance Act (FATCA) that demands foreign financial institutions disclose details of accounts controlled by US taxpayers.

Jersey protests

If they don’t, the US will fine the institutions and threatens to stop them carrying out lucrative business in the US.

The UK eagerly signed the first intergovernmental agreement to swop financial information with the US.

Now, the web has extended to cover Liechtenstein and Switzerland as well as British offshore financial centres.

The British government expects to raise at least £1 billion in revenue off undeclared interest and assets from the IoM, Jersey and Guernsey under ‘son of FACTA’.

Jersey was dragged almost kicking and screaming in to the tax network, claiming they would not sign up to the deal as the Channel Island would be at a financial disadvantage with non-FATCA financial centres.

Clawing back tax

The British government, supported by an increasing number of other countries, wants to take on other ‘non-disclosing’ financial regimes, without specifying where they might be.

The government defines tax evasion as moving money or assets out of the UK with the aim of not paying tax on any gains or earning.

In a report published alongside Budget 2013 documents, called No Safe Havens, HM Revenue & Customs admits the size of the problem is not known, but the tax authority expects to claw back at least £10 billion from son of FATCA and other disclosure agreements.

HMRC also warns that the increasing number of tax information exchange agreements linked to increasingly effective technology that can detect suspect tax transactions means anyone evading tax has a decreasing number of places to put their money.

The government is also increasing penalties for failing to disclose tax liabilities to up to 200% of the amount owed plus interest.

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