The International Tax Compliance (Client Notification) Regulation
HM Revenue & Customs (HMRC) is obtaining an unprecedented amount of information about people’s overseas accounts, structures, trusts, and investments from more than 100 jurisdictions worldwide, as a result of global tax transparency. This gives HMRC unprecedented levels of information to check that the right amount of tax has been paid, which it has in most cases.
If you have already declared all of your past and present income or gains to HMRC, including those from overseas, you do not need to worry. But if you are in any doubt, HMRC recommends that you read their factsheet which we have attached, to help you decide what you may need to do.
The background are the changes that take effect on 30 September 2017 to the International Tax Compliance Regulations 2015 which relate to the obligation to report all UK taxable income. This extends to:
- Self-employment income
- Profits from selling assets abroad.
The only one of the above where we will have provided advice is on investments and specifically Offshore Insurance Bonds. Such a Bond is an entirely legal, non-contentious and non-tax avoidance arrangement so there is no need for concern or worry as to the original advice you have been given.
As the documentation we provided made clear at the time such an investment was made, Offshore Insurance Bonds provide tax deferment not tax avoidance. The Bond is issued by an offshore domiciled insurance company, typically in the Isle of Man, and as a result that arrangement is outside the tax reach of HMRC. You are able to take annual withdrawals of up to 5% p.a of the initial sum invested, which are carried forward if not used, are not income and therefore not subject to income tax. There is no requirement to include such withdrawals on your Self-Assessment Tax Return.
However if you exceed the above rate of withdrawal the Insurance Company has to issue a Chargeable Event Certificate both to you and to HMRC which can give rise to an income tax charge. If those circumstances arise we will notify you in advance and make you aware of your obligation to disclose the taxable gain to HMRC. This has always been our practice so there is no change as a result of these new regulations.
We have already written to all our clients who we have been able to identify as having Offshore Insurance Bonds therefore this notice is intended to be for general information.
However if you have any questions do not hesitate to call us.
The information contained in our website is for guidance only and does not constitute advice which should be sought before taking any action. The information is based on our understanding of legislation, whether proposed or in force, and market practice at the time of writing. Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Fiducia Wealth Management Limited, or any associated companies or persons, its officers or its employees, for any loss occurred in connection with the content hereof and any such action. Professional financial advice is recommended for every case.
Fiducia is a multi award-winning firm of Financial Advisers based in Dedham near Colchester situated in the heart of Constable Country on the Essex Suffolk border. www.fiduciawealth.co.uk
Fiducia Wealth Management Ltd. Dedham Hall Business Centre, Brook Street, Dedham, Colchester, Essex, CO7 6AD.
Fiducia Wealth Management Ltd. is authorised and regulated by the Financial Conduct Authority. FCA No. 408210