Now that the election is over we can breathe a sigh of relief – not that I can remember what the worry was about, when some of the changes we know are already going ahead from the last finance bill are themselves fairly significant.
One of the most important changes in the last finance bill was the early closing in December this year, of the Isle of Man and Channel Islands disclosure facilities to new registrations.
That early closing will have a major impact, where any mistakes or irregularities on tax returns are discovered once the registration closing date passes. Penalties will increase significantly under the new regimes and, as of the time of writing, it is unclear where this will leave ‘innocent error situation’, which is how cases I look at tend to be categorised.
So far, my experience of these facilities and the wider Swiss investigations has been fairly positive. Tax returns often contain mistakes, no one is infallible, and the tax authorities have an interest in making the process of correcting this user friendly – to a degree. Otherwise, who would ever sign up for them? So there is sensible thinking behind these facilities!
The early closing of the disclosure facilities means that, yet again, it is better to do an early (i.e before 31 December 2015) check for any errors on any offshore planning structures. These errors can simply be an omission to include relevant entries on your own UK self assessment return, for income and gains in the structure that may be taxable on you under the UK tax system and therefore are required to be included in your self assessment tax return. These mistakes are easy to spot and the levels of tax underpaid on those I have seen so far have been in the range of a relatively small amount of about £2,000, up to a more significant amount of almost £60,000. The levels of penalties and interest on these were not significant for a number of technical reasons.
Don’t forget that the move to a common reporting standard in the international banking system is well on the way to being implemented, so it is now simply a matter of time before banking transactions on offshore structures are fully reported to HM Revenue & Customs.
It really is better to get everything in order before that happens.