The fallout from the Panama Papers
The use of overseas companies and trusts to avoid and evade tax has been in stark focus in the media over the last week following the leaking of information from files belonging to the law firm Mossack Fonseca.
The media and public interest led to a number of announcements over the last few days which are outlined below.
Companies to be criminally liable if employees facilitate tax evasion
The Prime Minister (“PM”) announced to Parliament plans to bring forward proposals to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion.
The PM stated that this new offence will be introduced this year.
The precise details have yet to be published but it is likely that it will affect not just internal Legal Counsel and accountants but also external bodies such as banks, Independent Financial Advisors, lawyers and accountants.
New task force
The Government announced a new task force over the weekend to investigate issues arising from the Panama documents.
The task force will be led by HM Revenue & Customs and the National Crime Agency but will also include investigators from the Financial Conduct Authority and the Serious Fraud Office.
The new task force will receive initial funding of £10 million and will report on its progress to the Chancellor of the Exchequer and the Home Secretary later this year.
Overseas territories and Crown Dependencies
Britain’s overseas territories and Crown Dependencies will now provide British law enforcement and tax agencies full access to information on beneficial ownership of companies which will provide greater transparency.
It should be stressed that UK resident persons are generally liable to UK tax on their worldwide income and gains, whether or not remitted to the UK. Certain relieving provisions continue to be available for individuals who whilst being resident in the UK, are not domiciled in the UK. It is also the case that quite draconian anti-avoidance legislation exists, which is designed to tax income and gains which UK resident individuals divert to non-UK resident entities. As such great care is needed if offshore structures are to be used as part of a tax-planning exercise.Talk to Barnes Roffe today