A memorandum of understanding between the Isle of Man Government and the UK’s HM Revenue & Customs was signed on 19 February 2013 setting out the terms of a new agreement and disclosure facility between the two countries.
The financial world becomes steadily more transparent. Those with ‘hidden funds’ should beware. The UK Government is using Money Laundering regulations to pursue previously untaxed funds. The latest is with the Isle of Man Disclosure Facility. The agreements signed include an automatic tax information exchange and the setting up of a disclosure facility.
The Isle of Man Disclosure Facility will run from 6 April 2013 to 30 September 2016 in order for taxpayers with relevant investments in the Isle of Man to bring their tax affairs up-to-date.
The terms set out in the Memorandum suggest that the Isle of Man Disclosure Facility will bear some similarities to the Liechtenstein Disclosure Facility, including an April 1999 cut-off date, a guaranteed penalty rate of 10% for returns due to be filed before April 2009 and a proposed single point of contact.
There are some key differences however, including the fact that there will be no guarantee against criminal investigation for tax related offences.
Further confirmation will be needed but it appears that a qualifying connection to the Isle of Man could be established if an interest in relevant property is established at any time before 31 December 2013. This may mean that those with undisclosed income could transfer assets to the Isle of Man in order to take advantage of the beneficial tax treatment available.
Eaves and Co have successfully completed a number of disclosures under the Liechtenstein Disclosure Facility and will therefore be well placed to advise on the new Isle of Man Disclosure Facility if you are affected.
A copy of the Memorandum of Understanding can be found here, whilst the HM Treasury press notice can be viewed here.