Several European governments will be able to see which of their citizens is holding money in foreign accounts, away from the taxman’s grasp
Not one but two press releases from the taxman hit my inbox yesterday, and a gleeful duo they were too. David Gauke, Exchequer Secretary to the Treasury and the politician responsible for HMRC, was almost crowing about his twin announcements.
The first was that the UK, France, Germany, Italy and Spain are going to work together on automatic multilateral tax information exchange. While that doesn’t exactly sound like cause for jubilation, it means that all those governments will be able to see which of their citizens is holding money in foreign accounts, away from the taxman’s grasp. There is already a similar exchange with America thanks to FATCA.
Gauke spoke of ‘a step change in the ability of tax administrations to clamp down on tax evasion’, which is what is really behind this: greater transparency not for the sake of justice but for the sake of revenue. More money for HMRC!
As our legal columnist Martyn Gowar recently wrote, and Gauke confirmed, this is the path towards the global enforcement of tax laws, or – to put it simply – there will be nowhere to hide your money.
Nowhere to Hide
The second, not unrelated, release demands that ‘tax cheats who have been hiding investments and assets in the Isle of Man, Guernsey or Jersey to evade tax’ pay up before 30 September 2016.
This is a case of stick and no carrot: those who come forward have to pay full tax, interest and penalties. The reason this might seem like a (relatively) attractive option is that after September 2016, the government automatically gets information on all account-holders, thanks to a new information exchange agreement. Penalties thereafter will be even more severe, one expects.
Again, Gauke was pleased, almost gleeful: ‘The net is closing in on those seeking to hide their money offshore to evade their tax responsibilities. While the majority of people and businesses pay what they owe, this Government is determined to tackle the minority of tax evaders who don’t.’
Added to last week’s release of the names of those who have accounts or companies in the British Virgin Islands, thanks to a mysterious package of data which appeared on a journalist’s desk, these pieces of news confirm that the number of destinations for those trying to hide their money – for reasons good or ill – is rapidly falling.