The Cayman Islands and many other tax free havens are probably starting to look less attractive to those Brits who are keen to hide at least some of their undisclosed wealth from the taxman.
Since Monday October 1st HMRC has new legislation that demands all UK taxpayers have to declare their foreign assets and pay UK income tax, capital gains or inheritance tax on them, otherwise fines will be swift and severe.
Geoff Newman, Development Director at leading Hertfordshire-based financial planning and financial advice firm Lyndhurst Financial Management says
“There will always be people who want to hide their wealth, whether from the taxman or an angry ex spouse and, equally, disreputable companies which will help with offshore funds or dodgy film schemes and the like.
Under this new legislation HMRC can fine UK taxpayers twice the amount of tax they already need to pay because of the new “requirement to correct” rules. Taxpayers who have declared foreign assets have a 90 day breathing space before full disclosure and subsequent tax payments.
I think that while this is good news it’s going to be hard to monitor or trace foreign assets and the money that would have to be spent on investigations may be worth more than the recovered tax. However, if it helps to stop people avoiding tax and prevents at least some criminal activity around money laundering it can only be for the good of the UK economy.
High net worth individuals don’t have to hide their wealth. If they get good professional financial advice they can actually use the money they might want to hide from the taxman by investing in the UK, thereby benefiting both themselves and the country as a whole.”