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UK Seals FATCA Deal With The Isle Of Man

by Jason Gorringe,, London

21 February 2013

The UK Government announced on February 19, 2013, that it had concluded negotiations with authorities in the Isle of Man towards an agreement to automatically exchange tax information, and on the introduction of an amnesty program for taxpayers with outstanding tax dues to benefit from lower penalties on disclosure.

As part of the territory's efforts to lead from the front on tax transparency, the Isle of Man has agreed to share a wide range of financial information relating to UK taxpayers with UK authorities annually. The agreement aims to establish a cooperative framework to facilitate the implementation of a Foreign Account Tax Compliance Act-style regime in the United Kingdom, similar to that being implemented in the United States, to ensure that tax is paid on income deposited in overseas accounts.

The UK Chancellor of the Exchequer, George Osborne stated: “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. I welcome the progress made with the Isle of Man and look forward to working on this new standard in the automatic exchange of tax information."

"Today’s agreement builds on the groundbreaking work we have already carried out - the UK Government has signed agreements with the US and Switzerland so far and we are in discussions with Jersey and Guernsey as part of our common commitment to combat tax evasion.”

The UK Government plans to launch a disclosure facility on April 6, 2013, that will run until September 2016, allowing UK taxpayers with undeclared deposits in the Isle of Man financial institutions to regularize their tax affairs before automatic information sharing is implemented.

According to information published by the UK government, liabilities arising from April 1999 must be fully disclosed and there is a guaranteed penalty rate - 10% in respect of periods before April 2009 and 20% thereafter. The facility will not be available to those under inquiry by HMRC, and those who have previously been under investigation will not be able to benefit from the guaranteed penalty rates or start date. In addition, the government has clarified that there is no guarantee against criminal investigation for tax related offenses; HMRC’s published criminal investigation policy will apply.

TAGS: Isle of Man | tax | investment | banking | international financial centres (IFC) | Guernsey | Jersey | United Kingdom | offshore | agreements | offshore banking | Switzerland | United States | Compliance

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