Introduction

Tax evasion has been in the news over the last two weeks following the articles in the press about bank accounts at HSBC in Geneva. Criticism has been levied at HM Revenue & Customs in Parliament and in the press, for not prosecuting people who had bank accounts in Geneva and who had not disclosed the income on their tax returns. The policy of HM Revenue & Customs has been to encourage people to make a full disclosure under a Disclosure opportunity and, if they don’t take advantage of this, they face the risk of prosecution.

Disclosure Facilities

Currently there are Disclosure Facilities for the Channel Islands and Isle of Man. These are primarily aimed at giving people a chance to disclose undeclared income from bank accounts held in these jurisdictions and the deadline for registering with HMRC to use these facilities is 30 September 2016. These facilities can be used to make other disclosures to HMRC apart from undeclared income on bank accounts or securities portfolios held at banks in the Channel Islands or Isle of Man. There is also the Liechtenstein Disclosure Facility. This remains open until April 2016. The terms of this facility are particularly favourable and it has been used extensively in order to regularise the position for people who had undeclared Swiss bank accounts. This facility can also be used in some cases to address other sources of undeclared income and gains.

UK/Swiss Tax Agreement on Swiss Bank Accounts

In 2012, the UK Government made an agreement with the Swiss Government regarding Swiss bank accounts. As a consequence of this agreement people with undeclared Swiss bank accounts faced a choice; agree to voluntary disclosure of income and gains on the account or face a one-off tax charge (typically about 20%) on the capital in the account and ongoing high rates of withholding tax on income and gains. Many people chose to use the Liechtenstein Disclosure Facility in order to deal with the past and avoid having to pay the one-off charge. This facility may still be useful for people who have paid the one-off charge in some cases.

Other Disclosure Opportunities

HM Revenue & Customs have also announced various other disclosure opportunities aimed at particular sectors to encourage people to make disclosures. Previous initiatives were aimed at the healthcare sectors, plumbers and electricians. The latest such initiative was announced recently and is called the Solicitors Tax Campaign. People working in the legal profession as a solicitor in a partnership or company or as an individual can make a voluntary disclosure of any undeclared income. Anyone wishing to use this disclosure opportunity must notify their intention to HMRC by 9 March 2015 and make the disclosure by 9 June 2015.

Automatic Exchange of Information

The UK Government has signed a large number of information exchange agreements with other countries. These include the Channel Islands, Isle of Man, Bermuda, British Virgin Islands, Cayman Islands and Gibraltar. Under these agreements there will be automatic exchange of information so that income earned by UK residents in countries which have signed these agreements will automatically be notified to HMRC.

We have a good deal of experience in making disclosures under the HM Revenue & Customs disclosure opportunities. If you have any issues that you would like to discuss in connection with the above then please contact a member of our tax team.