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Tax Evasion clampdown?

Postby Barnsley » Tue, 06 May 2014 4:32 pm

http://www.bbc.com/news/business-27289312

Where are our American friends going to hide their readies now that the Swiss and Singapore are complying with US Govt requests?
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Postby JR8 » Tue, 06 May 2014 5:40 pm

Such is one downside of having a citizenship that requires taxation of global income/assets.

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Postby PNGMK » Tue, 06 May 2014 6:33 pm

Offshore company accounts for the win.

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Re: Tax Evasion clampdown?

Postby zzm9980 » Tue, 06 May 2014 11:43 pm

Barnsley wrote:http://www.bbc.com/news/business-27289312

Where are our American friends going to hide their readies now that the Swiss and Singapore are complying with US Govt requests?


You laugh now, just wait until Her Majesty's Whatever Whatever (and all of the rest of Europe) eventually adopt the US Gov's view of their rights to their citizen's global income...

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Re: Tax Evasion clampdown?

Postby Barnsley » Wed, 07 May 2014 12:08 am

zzm9980 wrote:
Barnsley wrote:http://www.bbc.com/news/business-27289312

Where are our American friends going to hide their readies now that the Swiss and Singapore are complying with US Govt requests?


You laugh now, just wait until Her Majesty's Whatever Whatever (and all of the rest of Europe) eventually adopt the US Gov's view of their rights to their citizen's global income...
:o :o :o
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Re: Tax Evasion clampdown?

Postby JR8 » Wed, 07 May 2014 12:21 am

zzm9980 wrote:You laugh now, just wait until Her Majesty's Whatever Whatever (and all of the rest of Europe) eventually adopt the US Gov's view of their rights to their citizen's global income...


Never going to happen. If HM-whatever get the tax-man on us we just shift the assets to the Isle of Man or the Channel Islands. Simple. Want to get clever?: Do it via an offshore company. Cleverer still, a trust via a corporate shell held via an offshore company, within an 'offshore' jurisdiction - almost untouchable.

What I found interesting was HMRCs no-compromise public position - vs - the reality of 'well, ok, if you want to bring this all back onshore, we can reach some negotiated situation/future outcome and settlement with you. It's all perfectly legal to seek to avoid tax (as a Brit), and trusts have been around for at least 900 years.

The facts are far away from the headline dogma, me thinks.

The US putting the sweat on tax havens is nothing new, but their reach is token+public, their effectiveness is highly limited.

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Re: Tax Evasion clampdown?

Postby ScoobyDoes » Wed, 07 May 2014 10:00 am

JR8 wrote:Never going to happen. If HM-whatever get the tax-man on us we just shift the assets to the Isle of Man or the Channel Islands. Simple. Want to get clever?: Do it via an offshore company. Cleverer still, a trust via a corporate shell held via an offshore company, within an 'offshore' jurisdiction - almost untouchable.



It will be a good idea to ask Bernie before he ends up in a German jail.
'When Lewis Hamilton wins a race he has to thank Vodafone whereas in my day I used to chase the crumpet. I know which era I'd rather race in.'

SIR Stirling Moss OBE

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Re: Tax Evasion clampdown?

Postby JR8 » Wed, 07 May 2014 11:00 am

ScoobyDoes wrote:It will be a good idea to ask Bernie before he ends up in a German jail.


'Bernie' is a billionaire, and I can imagine he has some very eminent, and perhaps creative tax-advisers. Going after the likes of him is par for the course, as they know if they can shake just one of his orchard full of apples from a tree, it's likely to be a relatively fat and juicy one.

Oh, but anyway, he is accused in Germany of corruption (bribery), and not tax evasion.

p.s.
Re: Isle of Man, Guernsey and Jersey, and my comment 'Never going to happen'.

'Being independently administered jurisdictions, none forms part of the United Kingdom, the Commonwealth of Nations, or the European Union' http://en.wikipedia.org/wiki/Crown_Dependencies

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Re: Tax Evasion clampdown?

Postby QRM » Wed, 07 May 2014 11:44 am

JR8 wrote:
zzm9980 wrote:You laugh now, just wait until Her Majesty's Whatever Whatever (and all of the rest of Europe) eventually adopt the US Gov's view of their rights to their citizen's global income...


Never going to happen. If HM-whatever get the tax-man on us we just shift the assets to the Isle of Man or the Channel Islands. Simple. Want to get clever?: Do it via an offshore company. Cleverer still, a trust via a corporate shell held via an offshore company, within an 'offshore' jurisdiction - almost untouchable.

What I found interesting was HMRCs no-compromise public position - vs - the reality of 'well, ok, if you want to bring this all back onshore, we can reach some negotiated situation/future outcome and settlement with you. It's all perfectly legal to seek to avoid tax (as a Brit), and trusts have been around for at least 900 years.

The facts are far away from the headline dogma, me thinks.

The US putting the sweat on tax havens is nothing new, but their reach is token+public, their effectiveness is highly limited.


I thought things are already underway http://www.theguardian.com/business/201 ... -crackdown? I know a lot of people bailing out of the Chanel islands or is it just a panic?

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Re: Tax Evasion clampdown?

Postby Beeroclock » Wed, 07 May 2014 11:59 am

JR8 wrote:
zzm9980 wrote:You laugh now, just wait until Her Majesty's Whatever Whatever (and all of the rest of Europe) eventually adopt the US Gov's view of their rights to their citizen's global income...


Never going to happen. If HM-whatever get the tax-man on us we just shift the assets to the Isle of Man or the Channel Islands. Simple. Want to get clever?: Do it via an offshore company. Cleverer still, a trust via a corporate shell held via an offshore company, within an 'offshore' jurisdiction - almost untouchable.

What I found interesting was HMRCs no-compromise public position - vs - the reality of 'well, ok, if you want to bring this all back onshore, we can reach some negotiated situation/future outcome and settlement with you. It's all perfectly legal to seek to avoid tax (as a Brit), and trusts have been around for at least 900 years.

The facts are far away from the headline dogma, me thinks.

The US putting the sweat on tax havens is nothing new, but their reach is token+public, their effectiveness is highly limited.
I am also cynical if the Govt's /regulators will make any tangible progress, more likely they will take actions that inadvertently make it worse.....

my personal opinion though, I do wish something would be done about it (i.e. offshore tax structures, whether legal or illegal). Income inequality gets worse each year, and one reason why the rich get richer is they use these schemes to minimize the tax the pay.

As usual, the middle class suffer the most, earning enough to get taxed at higher progressive rates, but not sophisticated/motivated/capable enough to structure their finances to reduce tax. Also earning enough to disqualify for welfare handouts.

In the corporate world, it has been good to see companies getting named and shamed for their tax practices, but actually it also seems that people don't really care that much to change their behaviours, i.e. i didn't see many people stop googling, buying iphones or sipping starbucks lattes.

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Re: Tax Evasion clampdown?

Postby JR8 » Wed, 07 May 2014 12:23 pm

QRM wrote:I thought things are already underway http://www.theguardian.com/business/201 ... -crackdown? I know a lot of people bailing out of the Chanel islands or is it just a panic?


Thanks for the link, I hadn't heard about this.

Thoughts:
- How can they, the mentioned islands, be both 'UK' and 'offshore' within the same sentence/headline, or indeed jurisdiction?
- 'Hello Switzerland'
- This would destroy the economies of the Isle of Man, and Guernsey/Jersey.
- Ironic it's the Tories and it wasn't Labour floating this.

I suspect it might be American and EU pressure, but I have difficulty seeing how the UK has any jurisdiction. Either way, I can't see anything happening soon.

Thanks for the heads-up on it though, useful to have a weather-eye on it!


p.s. 'The draft UK equivalent, seen by the magazine International Tax Review, will require British tax havens to make similar disclosures about UK account holders to UK tax authorities.'

What is the definition of 'British tax havens'? Well, from Wikipedia, re: Great Britain.
---
'It does not include the Isle of Man and the Channel Islands, which are self-governing dependent territories.'
http://en.wikipedia.org/wiki/Great_Britain


The Isle of Man and Jersey/Guernsey have their own legislatures, so I'm left feeling pretty confused! :???:

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Postby JR8 » Wed, 07 May 2014 12:55 pm

@BoC
'Income inequality gets worse each year, and one reason why the rich get richer is they use these schemes to minimize the tax the pay.'

----------------------------------

Google definition:
'noun: tax avoidance. The arrangement of one's financial affairs to minimize tax liability within the law.'

-----------------------------------

Tax avoidance is every man's right.
- Will you volunteer to stop visiting Duty Free Shopping, or
- Should duty-free be made illegal?

:wink:

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Postby sundaymorningstaple » Wed, 07 May 2014 1:06 pm

Some additional reading from an article in the British based Nexus Magazine from www.expatnetwork.com. Sadly I cannot post a link to it as it is a subscription based PDF file format. But I post it here in it's entirety..... (long read)
___________________________________________

Tax and Residence Rules for Expats
BY IAIN YULE

A statutory definition of tax residence was
introduced in the UK with effect from 6 April
2013 and expats should check their own
circumstances against the test to make sure
they remain UK non resident. Non-residence
of course means that expats need not pay UK
income tax.
The first step in establishing UK residence,
according to accountants Ensors, is to look at
the ‘basic rules’, which will establish whether
an individual is either:
• Conclusively non-resident: ‘the automatic
overseas test’, or
• Conclusively resident: ‘the automatic
residence test’
• Or whether, if neither of these apply, it will
be necessary to consider other connection
factors and day counting: ‘the sufficient ties
test’.
One of the ‘automatic overseas tests’ will
apply when, broadly, an individual leaves the
UK to carry out full-time work abroad for at
least a complete tax year. Provided they are
present in the UK for no more than 90 days in
the relevant tax year and no more than 30
days are spent working in the UK in that tax
year, the individual should be treated as non-
UK resident. However, the requirements of
this newly-defined test are far more onerous
than those working overseas have been used
to, and what has always been known as the
‘Full-time work abroad’ test is now referred to
in the legislation as the ‘Sufficient Hours
Overseas’ test.
The broad criteria for meeting this ‘Sufficient
Hours Overseas’ test are:
• You work sufficient hours overseas during
the tax year concerned, and
• During the tax year, there are no significant
breaks from overseas work, and
• The number of days in the tax year that
you do more than three hours’ work in the UK
is less than 31, and
• You spend less than 91 days in the UK in
the tax year.
You will be considered to be working
sufficient hours overseas if you work for an
average of at least 35 hours per week,
whether you are an employee or selfemployed.
While this sounds simple enough,
the way the test works is complex and highly
prescriptive - and it is in fact possible to be
contracted to work a 35 hour week, but still
fail, depending upon the amount of leave
taken. In order to calculate whether the test
is met, it will be necessary to add up the total
number of hours that you actually work
overseas in every tax year (rather than the
hours specified in your contract) - and HMRC
will be entitled to ask for evidence of this.
When calculating the average time worked,
the length of the period should be reduced
by sick leave, and ‘reasonable’ periods of
annual leave (including parenting leave), even
if that leave is taken abroad. ‘Non-working
days’ (such as weekends and public holidays)
may need to be deducted along with the
leave period, depending on when the leave
period starts and/or finishes. It will therefore
be necessary under the new regime to retain
full details of such leave, including precise
dates.
Any time spent working in the UK will not
count towards your average hours, and only
limited gaps between employments can be
deducted from the period over which you
calculate the average. If you have more than
one overseas job or trade, it will be necessary
to aggregate the hours worked in each when
calculating your average hours.
You will have a significant break from your
overseas work if at least 31 days go by and
not one of those days is a day on which you
work for more than three hours overseas, or
would have worked for more than three
hours, but do not do so because you are on
leave. A break of more than 30 days (other
than for leave) will mean that you cannot
qualify for full-time work overseas under this
test.
In addition, if you change employment, or
finish one contract to start another, and there
is a gap in your working life, you can only
deduct up to 15 days from the period over
which you calculate the average for the
‘sufficient hours overseas’ strand of the test.
If the gap is longer, any days over the 15
cannot be deducted.
If you are not present in the UK at the end
of a day, that day will not usually count as a
day spent in the UK. However, if you are
present in the UK on more than 30 days
without being present at the end of that day,
and have several UK ties in the tax year, then
days when you leave before midnight may
need to be added to the days that you must
count towards the 90 day limit.
If you work overseas but fail the ‘sufficient
hours overseas’ test for some reason, and do
not have what can be classified as an overseas
home, but do have a UK home in which you
spend more than 30 days during the tax year,
you would be treated as being UK resident
throughout the tax year concerned based on
this new legislation – even if you would
otherwise qualify to be non-UK resident
under the ‘sufficient ties test’. While a leased
overseas property would certainly count as a
home, HMRC guidance indicates that one that
is occupied under licence (such as employer
provided accommodation) would not, unless
it is continuously available for your exclusive
use as your home.
Conclusions
• Although the new regime should give
greater certainty (especially for those with
simple tax affairs), it is definitely much more
complicated.
• Keeping full, detailed records is vital (such
as work contracts; details of leave periods and
actual hours worked for each job; precise
summaries of days spent and worked and in
which countries; flight boarding passes;
tenancy or employer-provided
accommodation occupation agreements etc).
• Many individuals will be well advised to
keep a proportion of their income aside
just in case they fall back into the UK tax net,
particularly if working in an unstable job.
All of the terms used in these tests have
detailed definitions in the legislation, and
there is still a great deal of complexity in the
detail for those whose affairs are not
straightforward. Advice should always be
sought concerning any areas of doubt.
Further detail on these residence ‘tests’ can be
found at www.expatnetwork.com, by clicking
on Money then Expat Tax then Residence &
Domicile.

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Postby sundaymorningstaple » Wed, 07 May 2014 1:09 pm

Another article from the same issue of Nexus (April 2014)



Keep Records Which Show Non-Residence

As we have stressed many times in Nexus, with the new statutory residence test
rules, expats have to make sure of their status by keeping careful travel records.

The issue of where you are resident for tax
purposes can be more complicated than
many people realise, say expat advisers
Blevins Franks. If you get it wrong, you could
face a tax investigation. If the tax authority
wins its case, you could have to pay a large
and unexpected tax bill, with interest and
penalties. Even if you get it right, you may still
have to argue your case, so it is important to
be armed with all the facts and keep up-todate
and detailed records.
Residence is a matter of fact. It is where you
spend your time. Each country uses different
domestic rules to work out who is resident for
tax purposes. If you satisfy these rules, you are
resident there for tax purposes and liable to
tax there, very often on worldwide income
and gains. Therefore, you cannot choose
where to pay tax.
You can however choose where you spend
your time, to determine your tax residence.
You can also choose when to sell assets, to
determine where you pay tax on the gains.
But this is where it gets complicated. It is easy
to slip up and specialist guidance is essential.
Likewise, if you are resident in the UK you
are liable for UK tax on your worldwide
income and gains. However, the UK residence
rules are far more complex. Prior to April 2013
the concept and definitions of ‘residence’ were
not defined within UK legislation. Taxpayers
had to rely on previous case law and HM
Revenue & Customs (HMRC) guidance to
determine their residence position. The rules
contained many grey areas and some
taxpayers inadvertently fell foul of these.
The new statutory residence test, in effect
since April 2013, provides more, although it is
still complex. It is based on a combination of
day counting and the number of ties you
have with the UK. For three years the old and
new rules work side by side.
HMRC are still catching up with people over
their residence position several years ago.
Two recent court cases highlight the
importance of taking expert advice, and
following the advice carefully and keeping
meticulous records.
Mr and Mrs Rumblelow, living in Portugal,
lost a court case with HMRC over their
residence status and now have a tax liability
of £600,000 to settle. On the other hand,
HMRC lost a similar case against Mr Glyn, who
saved around £5.5 million in tax through very
careful planning and record keeping over his
move to Monaco.
Unless your situation is straightforward -
and you are you sure it is? - it is essential to
take specialist advice from an adviser who is
up-to-date and experienced with the
residency and tax rules of both the UK and
the country where you are living.

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Postby sundaymorningstaple » Wed, 07 May 2014 1:13 pm

And another from the same issue.....

Another from the same issue of Nexus.....

Offshore Accounts Hit By New Clampdown

By Iain Yule - Consultant Finance Editor of Nexus

New campaign targets offshore account holders in fresh clampdown
on tax evasion.

As G20 ministers welcome a new global
standard to automatic tax information
exchange and call on the governments of
financial centres to sign up to new
international tax information sharing
agreements, the Chancellor of the Exchequer
George Osborne has launched a new
campaign targeting taxpayers with money
hidden in offshore accounts.
The UK has already entered into new
information-sharing agreements with the
Crown Dependencies and Overseas Territories
which will provide HM Revenue & Customs
(HMRC) with access to more data than ever
before on offshore accounts held by UK
taxpayers.
The UK, following an agreement reached
last year with France, Germany, Italy and
Spain, will also move quickly to implement
the new global standard on a multilateral
basis. So far 42 countries and jurisdictions
have joined this initiative which will lead to
the rapid embedding of the new global
standard and the removal of hiding places for
tax evaders as HMRC uses new information to
clamp down on tax evasion.
Any taxpayer who has declared all of their
income has nothing to fear, but anyone who
fails to do so will have to pay the tax itself as
well as penalties of up to twice that sum, and
could face imprisonment. The new HMRC
campaign is running in national newspapers
and weekly magazines.
The launch of the campaign follows the
G20 group of finance ministers’ further
demonstration of its shared commitment to
tackling global tax avoidance and evasion
through agreements made at the G20
meeting in Australia recently..
Endorsing the Organisation for Economic
Cooperation and Development’s (OECD) new
global standard for automatic exchange of tax
information, unveiled at the meeting, the
group called on all financial centres to match
the G20’s commitment to tackling tax evasion.
The G20 said that it will continue to focus
on ensuring that developing countries benefit
from automatic information sharing alongside
developed economies.
The G20 finance ministers also restated
their commitment to fighting profit shifting
by multinational corporations to avoid paying
tax. They said they look forward to progress
in the OECD’s base erosion and profit shifting
(BEPS) project to reform the global tax rules
and tackle profit-shifting by multinational
companies as set out in the agreed timetable.
Chancellor of the Exchequer, George
Osborne said: "Last year the Prime Minister
put tax at the heart of the UK’s G8 agenda,
leading to groundbreaking consensus on the
action needed to bring greater transparency
and fairness to the global tax system. The
G20 took up the baton and at this meeting
we agreed the next steps in the international
fight against tax avoidance and evasion.
"The UK government is on the side of the
hardworking majority of people and
companies who pay the tax they owe. By
taking global action to reform the system
alongside a tough approach to enforcing the
law at home, we will close the net on those
who think they do not have to play by the
rules. This is a victory for Britain’s international
agenda and the fight against wrongdoing."
Jennie Granger, HMRC’s Director General
for Enforcement and Compliance, said:
"Most people with offshore assets do the
right thing and tell us about them, and
therefore have nothing to worry about. But
for the minority who don’t, the net is closing
around them.
We are getting more and more information
that helps us to target offshore tax cheats
more effectively than ever before. If you have
assets offshore you need to get in touch with
us urgently, because we will catch up with
you. That can mean a fine of 200 per cent of
the tax that you owe, and the possibility of
criminal prosecution and a prison sentence."


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