Guernsey Discusses Incoming UK Tax Pact
19 April 2013
Posted by: Author: Jason Gorringe
Source: Jason Gorringe
The Guernsey Government has advised local taxpayers to ensure full tax has been paid on assets or investments in the UK before Guernsey tax authorities begin receiving information automatically from HM Revenue and Customs under a proposed agreement to ramp up tax information sharing between the two territories.
Guernsey and the United Kingdom are to sign an agreement for the automatic exchange of tax information to facilitate the UK's desire to implement a reporting regime mirroring that of the United States' Foreign Account Tax Compliance Act, under which foreign financial institutions are required to transmit comprehensive data about assets held on behalf of US taxpayers to US authorities.
Alongside the agreement, UK authorities are to agree to offer a concessionary penalty regime for UK taxpayers to declare untaxed assets in Guernsey and face lower penalty rates. Guernsey authorities have now clarified that the disclosure scheme is available to UK resident taxpayers only, and is not available, nor is it applicable, to Guernsey residents in respect of Guernsey income tax liabilities.
"Under the terms of an Intergovernmental Agreement, between Guernsey and the UK, that it is expected should be signed shortly, the Guernsey Income Tax Office will receive details of investments made in the UK by Guernsey residents. It may be the case, therefore, that there are some Guernsey taxpayers who will be discovered, by the Guernsey Income Tax Office, to have undisclosed tax liabilities in relation to these investments," the Guernsey Government said.
"[We] advise any taxpayer who has concerns that they may have submitted income tax returns which are incorrect or incomplete, or have failed to give notice of liability to Guernsey income tax, to contact the Income Tax Office and discuss their concerns with a member of staff within the Compliance & Investigation Unit (CIU). If their tax affairs are not already under inquiry by the Director, they may be able to take advantage of the provision in the Income Tax Law to correct their tax affairs without incurring a penalty (although late payment surcharges would continue to be payable, if applicable)."
"Any taxpayers who have irregularities with their tax affairs, and who are currently subject to inquiries by the Director, are also encouraged to contact CIU to make a full and complete disclosure of all irregularities, as an early disclosure will influence the amount of any penalty the Director may impose," the Government concluded.