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Regulatory changes: what to look out for in addition to tax issues

Tax planning is a key consideration for anyone investing in the UK but there are a number of regulatory matters which have recently been introduced, or will shortly be introduced, which must not be overlooked. The context is that in recent years, the UK has been at the forefront of the tax transparency agenda and is keen to ensure that global tax avoidance and evasion is eliminated wherever possible.

Readers may be familiar with Foreign Account Tax Compliance Act (FATCA) which was a United States initiative to ensure that the global activities of US citizens were identified. FATCA was both adopted and adapted by other countries so that in addition we have the Common Reporting Standard (CRS) which is organised by the Organisation for Economic Co-operation and Development (OECD). Together these initiatives facilitate the exchange of information between tax authorities so that transactions are linked back to a country of residence and tax obligations can then be enforced.

In addition to signing up to the International agreements, the UK has also introduced a number of domestic transparency initiatives which will affect inward investors. Liz Cuthbertson explains some of the new tax charges affecting even non-residents in her article ‘Is investment in the UK still alive?’ but there needed to be a means of policing them. For this purpose, the UK now has a register of “persons with significant control” over companies with a presence in the UK. This means there is a publicly accessible record at Companies’ House, which must be maintained by the company, of the individuals behind it. Failure to comply is a criminal offence.

In a not dissimilar vein there is also a register of Trusts and again the individuals behind the trusts must be disclosed. The Trust register is administered by HMRC and any trust with a UK tax liability must comply again at the risk of criminal sanction for a failure. The information required is extensive and may take some time to collect but there are deadlines for registration.

The final piece of the jigsaw (hopefully) is a new and tougher “requirement to correct” tax returns with an omission or error. Failure here will attract financial penalties.

The authorities are hoping to prevent money laundering and tax evasion through a combination of tough penalties and reputational damage. The problem is that even innocent errors can be caught in this regime and ignorance of the law will not be a defence.

At Mercer & Hole we are happy to advise you on how these changes impact upon you so that you can concentrate on your business here, in the knowledge that you are fully compliant. If you need further information, please contact Lisa Spearman or your usual partner.



Date: 12th October, 2017
Author: Lisa Spearman


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