This article provides an overview of the 2013 disclosure facility agreement between the Isle of Man and the UK.
On 19 February 2013, the Isle of Man and UK Governments issued a Memorandum of Understanding (‘the Memorandum’) relating to cooperation in tax matters. The Memorandum announces a disclosure facility for individuals and incorporated companies with Isle of Man accounts. The facility allows taxpayers to approach UK HM Revenue and Customs (HMRC) on an anonymous basis to discuss undisclosed tax liabilities in the UK.
Participation in the disclosure facility
People who want to take advantage of the disclosure facility must apply to participate from the 5 April 2013 and before the 30 September 2016. All liabilities which have arisen from 6 April 1999 must be disclosed to UK HM Revenue and Customs (‘HMRC’).
The disclosure facility is available to those who have not taken part in other disclosure schemes offered by HMRC or those who have not been subject to tax investigations that have not concluded by 6 April 2013. Relevant persons, for the purpose of the Agreement between the Swiss confederation and the UK in the co-operation in the area of taxation, cannot participate in the Isle of Man and UK disclosure facility, for example where an individual has an undisclosed Swiss bank account.
Tax and penalties
Provided a full disclosure is made any liabilities which arose before the 6 April 1999 will not be pursued. Penalties under the disclosure are fixed between 10% and 40% depending on the nature of the undeclared funds and based on the country through which the liability originally arose.
HMRC offer a bespoke service which is a personalised service offered to the person taking advantage of this disclosure facility. Features of this service include:
- The possibility of an initial anonymous contact by a professional adviser, to discuss with HMRC the circumstances on a no names basis.
- Provided full and accurate disclosure is made, HMRC will determine a person's liability to pay outstanding UK tax, interest and penalties within nine months of making the application. HMRC may agree for payment to be made by instalments.
- Where a penalty is imposed under the disclosure facility, HMRC will not in relation to that penalty, publish information about that person.
The shape of things to come
It would appear that the Isle of Man and UK disclosure facility is not the first Memorandum to aid the prevention of fraud and tax evasion to be signed and is unlikely to be the last, it is definitely high on the radar of the UK and international governments, and an area of law which will continue to be a focus in future years.