Offshore tax evasion

The government is determined to reduce incentives and increase penalties for those who do not pay the tax they should. As part of this the UK has contributed to the development of new international standards on transparency, which will give HMRC more information to find offshore tax evaders.

In parallel with the development of a more robust system of tax information exchange, the government has toughened the penalties which apply where tax is evaded and such evasion involves jurisdictions that do not have the highest level of tax transparency.

In order to provide taxpayers with a final opportunity to settle their affairs before the receipt of vast amounts of data under various international agreements, HMRC offered a worldwide disclosure facility, which was available until the end of September 2018.

This subtopic provides guidance on the following measures to tackle offshore tax evasion:

  1. Exchange of information for tax purposes

  2. Offshore penalties, sanctions and criminal offences

  3. Disclosure facilities and tax co-operation agreement

  4. Client notification obligations

  5. Registers of ultimate beneficial owners

For guidance on anti-avoidance provisions affecting the scope for international

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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