The Isle of Man government recently signed an agreement with the UK government to automatically exchange a wide range of financial information on UK tax payers.
The information will be reported to HMRC and the agreement includes a disclosure facility, which will allow account-holders on the island to come clean and settle their outstanding tax bills – with interest – before their details are passed to HMRC.
- The disclosure facility is expected to start on April 6 and run until September 2016.
- The facility offers immunity from prosecution, but in most cases there will be a penalty charge of 10 per cent of unpaid tax up to 2009, and 20 per cent for later years.
- There is no guarantee against criminal investigation for tax related offences – HMRC’s published criminal investigation policy will apply.
- Those who have previously been under investigation will not be able to benefit from the guaranteed penalty rates or the disclosure facility start date.
- Those who choose not to come clean could be hit by a penalty of up to 200 % of the unpaid tax, or prosecution.
“The government is committed to tackling tax evasion and this agreement will greatly enhance HMRC’s ability to clamp down on those who try to hide their money offshore,” said Chancellor George Osborne. “Tax transparency will be a focus of the UK’s G8 presidency, where it will look to further promote automatic information exchange.”
Eddie Teare, Isle of Man Treasury Minister, said: “This swift agreement between our two governments will help us respond to the problems of tax evasion with appropriate immediacy. Furthermore, it will provide confidence to international investors in the Isle of Man that they are dealing with a regime that complies to global standards of best practice.”
This is the first agreement of its type between a crown dependency and the UK, and the UK Treasury is busy with ongoing negotiations with Jersey and Guernsey for a similar agreement.