Otherwise full details of their offshore accounts, trusts and companies held in Crown Dependencies or British Overseas Territories will be shared with HMRC from September 2016 under new rules stemming from the Foreign Account Tax Compliance Act (FATCA).
To avoid this happening, non-doms in the UK have to elect to join HMRC’s alternative reporting regime by the May deadline, in which case offshore financial institutions will only have to report the details of accounts and trusts which have remitted cash to the mainland UK but not other assets.
Pinsent said it was likely the tax office would start investigations into those who fail to join the alternative reporting scheme.
However, if non-doms elect to join HMRC’s alternative reporting regime, offshore financial institutions will only have to report the details of accounts and trusts which have remitted cash to the mainland UK and not other assets.
According to the law firm, the jurisdictions involved include crown dependencies like the Isle of Man, Guernsey, and Jersey, and the British Overseas Territories of Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands.
“Non-doms who fail to act quickly will lose a great deal of anonymity and potentially make themselves vulnerable to lengthy, in depth tax investigations,” said Paul Noble, tax director at Pinsent Masons.
“In many cases these investigations will be unnecessary, and have the potential to generate a lot of disruption, even for taxpayers whose tax affairs are compliant.”
“HMRC will be able to use the additional FATCA information to launch investigations. The level of detail that offshore financial institutions will have to disclose about their clients far exceeds that required in a normal UK tax return. For example, FATCA requires the disclosure of the balances held in each account.”
