The government has today agreed action with the Isle of Man to clamp down on those who try to hide their money offshore. This forms an integral part of the government's offshore anti-evasion strategy which will be published later this year. The package includes an automatic tax information exchange agreement and the setting up of a disclosure facility.
The disclosure facility will allow investors with accounts in the Isle of Man to come forward and settle their past affairs before information on their accounts is automatically shared.
Under the automatic exchange agreement, a wide range of financial information on UK taxpayers with accounts in the Isle of Man will be reported to HMRC automatically each year. It follows closely the UK-US agreement to Improve International Tax Compliance and to Implement FATCA in order to minimise burdens on financial institutions.
The disclosure facility will operate from 6 April 2013 and run until September 2016. Under its terms, liabilities arising from April 1999 must be fully disclosed and there is a guaranteed penalty rate - 10% for returns to be filed before April 2009 and 20% thereafter. The facility will not be available to those under enquiry by HMRC. Where HMRC uses the information made available under the information sharing agreement, it will be seeking significantly higher penalties.
Chancellor of the Exchequer, George Osborne said: '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.'
Tax transparency will be a focus of the UK's G8 presidency, where it will look to further promote automatic information exchange.
Further details are available from HMRC.
