There is a legal “Requirement to Correct” by September 2018, and anyone who does not do so will face penalties for “Failure to Correct” of between 100% and 200% of the tax at stake. In the worst cases there are additional penalties of 10% of the value of the offshore asset and naming and shaming on HMRC’s website.
The trust register represents unprecedented exposure for all of those involved with trusts, be they settlors, beneficiaries or even professional advisers. In particular, it places a heavy burden on trustees and will increase the costs of administering trusts.
Settlors and beneficiaries are being put in the spotlight, but the obligation falls on trustees and failure to report can result in two years in jail. In seeking to shine a light on murkier areas, the EU has placed a heavy burden on them.
A practical consequence of an exit will be cessation of access to the parent-subsidiary directive and the interest and royalties directives. These directives are designed to allow for flow of funds between member states without withholding taxes. After March 2019 the terms of the tax treaty between the UK and the relevant counter party will govern the extent that withholding taxes will apply.