No Safe Havens A UK Lawyer s View

Transcription

1 No Safe Havens A UK Lawyer s View STEP Israel Seminar, 9 th September 2014 Robert Levy, Executive Partner Kuits Solicitors Disclaimer: This presentation does not constitute advice. In all cases, specialist advice will be based on a bespoke analysis of an individual s specific circumstances. info@kuits.com

2 Robert Levy Robert Levy is Executive Partner of Manchester law firm Kuit Steinart Levy LLP and has a specialist practice in advising individuals and companies facing serious HMRC tax investigations. He is a recommended adviser listed by several Swiss and other offshore banks in relation to the U.K./Switzerland Tax Co-operation Agreement, Liechtenstein Disclosure Facility and the impact of FATCA related issues for U.K. taxpayers. Robert Levy has spoken at a number of international conferences on the subject of the global move towards tax transparency.

3 Where have we come from? USA vs UBS (2008) Liechtenstein Memorandum of Understanding (2009) Data theft (HSBC) (2010) UK Swiss Tax Co-operation Agreement the Swiss list (2011) OECD/G20 Global Standards on Exchange of Information ( ) Foreign Account Tax Compliance Act (FATCA) implementation (2014) UK Overseas Territories/Crown Dependencies ( ) Connect data analysis (from here to eternity ) HMRC engagement abroad

4 Where are we going? One World HMRC proposals strict liability criminal offence beneficial ownership rules focus on facilitators focus on serial refuseniks encouragement of whistle blowers enhanced publicity the 20-year rule under threat? 2016 end of disclosure facilities. What then? Political backdrop (UK/US) Changes in policy at Israeli banks

5 No Criminal Prosecution Designated inspector possibility of no-names discussions 10% Penalty ( ); reduced penalty thereafter Tax from 6 th April 1999 Composite Rate Option Ability to clear Inheritance Tax and VAT Light touch process LDF Benefits Time to obtain and consider information required Available to anyone with undisclosed offshore asset Availability of full benefits needs careful review

6 Offshore asset at 1 September 2009 not opened via UK Branch or Agency No current Code 9 letter Meaningful Liechtenstein asset (typically 20% of undisclosed assets) Undeclared UK tax liabilities LDF Requirements Not under criminal investigation for a tax matter Must apply within 90 days of any HMRC intervention (NEW) Undeclared tax liabilities must have meaningful connection to offshore asset (NEW) Disclosure must relate to assets new to HMRC (NEW)

7 Popular Misconceptions 1. I went through UK/Swiss deduction so I am clean and my anonymity is protected - Wrong! 2. If I go through the LDF HMRC will make my life a misery and target me and my business - Wrong! 3. If I go through LDF I will cause problems for other people - Wrong! 4. There will be another better amnesty down the line - Wrong! 5. HMRC will not find me because I have been very clever hiding my assets - Wrong! 6. My assets are in a foundation/trust/other structure and therefore not taxable - Wrong! 7. I am no longer in the UK, I am an Oleh Hadash, so I don t need to worry - Wrong!

8 LDF Process Points to consider Footprint in Lichtenstein 20% of assets Bank account with Liechtenstein Bank Can move funds in specie (no tax charge) Bond alternative (maybe cheaper) Obtain Confirmation of Relevance Apply to enter LDF Simple process Receive confirmation of acceptance into LDF Compile required information, prepare report and calculate tax

9 LDF Process Points to consider Sign report, offer letter and CERTIFICATE of FULL DISCLOSURE cannot declare part only Submit report 7 months/10 months after entry and pay tax interest and penalties at same time Time to pay may be available Receive certificate of disclosure Can move Liechtenstein asset back Receive acceptance letter Funds cleared for past tax

10 Inherited Money Income/Capital Gains Tax on deceased estates only 6 years prior to death and interest but no penalty Possibility of eliminating IHT through LDF if death prior to 5 th April 2009 with CRO

11 A short term solution not absolution Higher tax rates than UK Withdrawals not cleared Possible to obtain clearance with use of LDF LDF process may involve no further tax payment but provides confirmation from HMRC that no further tax is due Rubik is only the beginning UK Swiss deduction

12 What to do if your client gets a letter Take Advice Immediately No names basis discussions LDF within 3 months Certificate A No tax due Use if definitely no tax Recommend still provide background as to why HMRC may think tax is due and why you don t think tax is due

13 What to do if your client gets a letter Certificate B - Entry in LDF Significant cases with offshore asset Certificate C Tax to pay not via LDF Recommend use where you think there is no tax but not yet certain or where there is a small amount of tax to pay and beneficial terms of LDF are outweighed by costs of LDF and creating Liechtenstein footprint

14 Conclusion There are no Safe Havens Act now whilst you can whatever comes next will be worse! LDF offers best case scenario in most cases Lucky to be UK taxpayer

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