A leaked government document seen by IFLR's sister
publication International Tax Review reveals that the
UK is planning to impose its own version of the US Foreign
Account Tax Compliance Act (FATCA) on its Crown Dependencies
and Overseas Territories. The move will deal an almost-fatal
blow to tax evasion through the UKs tax
Responding to an International Development Committee
report earlier this
week, the government publicly
rejected the need for a UK version of FATCA, which
would require tax authorities to automatically exchange
information relating to UK citizens or corporations.
In private, however, the government has already
drafted FATCA legislation which it will impose on its Crown
Dependencies and Overseas Territories. These include some of
the worlds most notorious tax havens such as the Cayman
Islands, the Channel Islands and the Isle of Man.
The draft agreement, seen by International Tax Review, will require the
automatic exchange of information for each reportable account
of each reporting financial institution. That will include full
details of all beneficial owners of the account, including
those whose identities might otherwise be hidden by trusts or
It will also require the account number, name and
identifying number of the reporting financial institution as
provided when registering with the IRS for FATCA purposes, and
the account balance or value as of the end of the relevant
calendar year or other appropriate reporting period or, if the
account was closed during such year, immediately before
The move will come as a huge blow to tax havens and
companies and individuals hiding money in them. But it is a
coup for the Tax Justice Network (TJN), which has long been
arguing for automatic information exchange.
This is a requirement for full, open
disclosure, said the TJNs Richard Murphy. It
looks through trusts, companies, who owns the assets. Its
full automatic information exchange.
Murphy says the UK Crown Dependencies and Overseas
Territories will never be the same again and he has a simple
piece of advice for anyone hiding money in these
The evidence is now clear: the writing is on the
wall for secrecy in the UK's tax havens, he said.
There are now two options for those hiding their funds in
these locations. The first is to own up now. Thats the
wise option. Its the only safe option. The alternative is
to flee. My suspicion is that its already too late for
that to work.
Murphy says he understands that Jersey is strongly
opposed to the legislation, but Guernsey and the Isle of Man
are likely to roll over and take it.
Malcolm Couch, head of the income tax division at the
Isle of Man Treasury would not comment on the prospect of a UK
FATCA, but said that the Isle of Man has noticed that
discussions on international tax cooperation have moved to a
new place as it has become clear that FATCA will
Discussions on automatic exchange of information
have come to the fore, Couch said. The Isle of Man
needs to determine its position appropriately as things move,
but they are moving.
The UK Treasury declined to comment, but said that it
is assisting the Crown Dependancies and Overseas Territories in
their response to FATCA.
International Tax Review expects
an autumn announcement from the government, with the
legislation coming into effect on January 1 2014.
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