The revelations in early April about offshore companies and investment funds based in Panama have turned the spotlight on tax avoidance and evasion, as well as secret financial dealings in general. We can be sure that HM Revenue & Customs (HMRC) and other regulatory authorities will be scrutinising the data carefully.
There are several reasons why people hold funds offshore. You might hold a foreign currency bank account because you have business or a property abroad. An investment in an offshore bond might make sense for some people because it effectively defers a tax liability to a year when you might no longer be a higher rate taxpayer.
What is essential is that all income and gains are fully declared. A strategy that relies on HMRC not finding out is not legitimate tax planning but tax evasion. The penalties are high – up to 200% of the tax due.
Some political leaders have reacted by publishing their personal tax returns. In Norway, Sweden and Finland everyone’s income and tax details are published every year and are available online.
The UK might not go that far, but anonymity can no longer be guaranteed. No security barriers are 100% effective and new international agreements for exchange of information are being put in place. Calls for greater transparency may result in new disclosure requirements regarding trusts or share ownership, for example. If you are not sure of your tax position, we can help you.