Increasing the opportunity to disclose - The benefits of the new Isle of Man Disclosure Facility
April 09, 2013
Using the new Isle of Man Disclosure Facility (IOMDF)
The facilities enable individuals and businesses with assets in the Isle of Man or Channel Islands who have undeclared tax liabilities to bring their tax affairs up to date on beneficial terms. These arrangements are the latest in a series of facilities made available by HMRC which are intended to encourage holders of offshore accounts and assets to come forward and put their tax affairs right.
Isle of Man and Channel Islands financial institutions will be writing to all of their UK-resident clients in due course making them aware of the existence of the facilities. The facilities will be underpinned by information-sharing agreements between the UK and Isle of Man and Channel islands authorities under which details of UK-resident account holders will be made available to the UK authorities. Full details of the precise terms of these inter-governmental agreements haven’t been finalised yet but it’s expected that they’ll be modelled on the broad terms of the US-UK FATCA arrangements agreed between the UK authorities and the US Internal Revenue Service (IRS). This will require UK-resident individuals to disclose their bank accounts as well as financial arrangements held through trusts and companies on their behalf.
Differences between the IOMDF and the Liechtenstein Disclosure Facility
The facilities will run in parallel with another HMRC facility, the Liechtenstein Disclosure Facility (LDF). There are some important differences between the terms of the LDF and the Channel Islands and Isle of Man facilities which clients who have disclosures to make will need to think carefully about. For example, clients who’ve been subject to an in-depth HMRC investigation won’t be eligible to benefit from the either the Channel Islands or Isle of Man facilities. On the other hand, the nature of the financial commitment to the Isle of Man or Channel Islands which clients would need to make to qualify for the relevant facilities is less significant than under the LDF. So, clients are advised to consider their position carefully to make sure that disclosure is made in the most appropriate way.
Further disclosure facilities to come
It’s possible that further disclosure facilities will be announced in the near future. HMRC's offshore strategy, published in Budget 2013, makes it clear that these disclosure arrangements will be accompanied by ongoing compliance activity based on information already in HMRC's hands. In light of these developments, alongside the significant leaks of offshore data which have taken place recently, it’s becoming more and more likely that taxpayers seeking to use offshore accounts and structures to hide their wealth will come under close scrutiny from the UK tax authorities.
If you’d like to discuss how HMRC's disclosure facilities might affect you or your clients, please contact us on 0800 328 8215 or email [email protected]
You can download further detail on all three disclosure facilities below: