Time Running Out For Tax Avoiders As Data Deadline Approaches

Time is up for wealthy people with undeclared cash and investments hidden in offshore accounts to avoid tax.

The first reporting date for financial institutions around the world to swap data under automatic exchange of tax information passes at the end of the month (May 31).

Then, much debated tax avoidance information held by banks and other financial institutions will be passed to tax authorities.

The tax agreements

The information includes that held under:

  • The Foreign Account Tax Compliance Act (FATCA) – American legislation demanding foreign financial institutions pass data about accounts and investments controlled by US taxpayers to the IRS
  • The Crown Dependencies and Overseas Territories (CDOT) – Financial institutions from financial centres such as the British Virgin Islands, Cayman Islands, Gibraltar, Isle of Man and the Channel Islands to the UK’s HM Revenue and Customs (HMRC)
  • Common Reporting Standard (CRS) – Reciprocal returns between more than 50 tax authorities worldwide with information about money and investments held by their taxpayers in offshore accounts

Automatic exchange severely restricts the ability of taxpayers to hide their wealth offshore as almost every leading financial centre is taking part in swapping financial data.

Taxpayers do not have any extra burden under automatic exchange.

How automatic exchange works

However, the data collected will be compared with tax returns to make sure offshore account holders have paid the correct amount of tax.

The deadline is the first time data is collected under the CDOT and CRS agreements – and an extra 50 countries are expected to report under CRS in 2018.

The global networks will then cover more than 100 countries.

The report will cover accounts and investments held offshore by banks, building societies, investment houses, trusts and charities in the year to December 31, 2016.

“If you have a UK account provider they will send the information to HMRC, who will share the information with the relevant tax authority if the account is held by one of their tax residents,” says HMRC.

“If you are a UK tax resident with an account outside the UK, HMRC will receive information from the relevant tax authority.”

How automatic exchange of information works in the UK

List of countries sharing tax information

Stay Connected

Latest News

Non Resident Landlord Scheme Explained for Expats

The UK Non-Resident Landlord Scheme (NRLS) is the way HM Revenue & Customs collects tax on rents from property owners who spend...

OECD Explained

The Organisation of Economic Co-Operation and Development (OECD) is a forum for the governments of 37 developed countries to discuss economic and...

QROPS List – June 1, 2020

The number of Qualifying Recognised Overseas Pension Scheme (QROPS) across 28 countries has hit 1,917 – with 13 opening during the past...

FATCA List – June 2020

The US Internal Revenue Service’s list of foreign financial institutions (FFI) reporting under the Foreign Account Tax Compliance Act (FATCA) increased by 1,854...

Economic Impact Payments for US Expats

The US government is paying millions of dollars into the bank accounts of American expats as coronavirus economic impact payments and this guide will...

HMRC Explained

HMRC is short for Her Majesty’s Revenue and Customs. The HMRC collects the taxes and customs duties that the British government spends...

LEAVE A REPLY

Please enter your comment!
Please enter your name here