finance Under self assessment individuals who may have participated in a scheme could legally, through their self assessment tax return, withhold payment of any disputed tax. HMRC could not, until now, force an individual to pay this until an individual’s appeal had been heard by the Courts. Put simply any individual who has participated in a scheme since 2004 will be required to make a payment on account of all outstanding tax within 90 days, possibly as soon as the end of October 2014. These provisions will apply in relation to both existing schemes that have yet to be settled and to new schemes. Until the Draft Finance Bill receives Royal Assent both the Follower Provisions and the Accelerated Payment Provisions will remain subject to possible revision. TFO Tax understands that the promoters of such schemes have resolved to lobby Parliament and engage Counsel to advise, and if appropriate, challenge the provisions under the Human Rights Act, especially in relation to the Accelerated Payment Provisions. This retrospective action will almost certainly result in real financial hardship to individuals caught by the provisions. Osborne’s New Attack More recently the Chancellor has indicated that he intends to give HMRC new powers to make it easier to prosecute individuals that evade tax by hiding funds offshore. This may see the introduction of a new criminal offence carrying with it the possibility of a custodial sentence for individuals with undeclared foreign income, even where it was not their intention to evade taxes! This would signal a change in HMRC’s current policy of relying on “cost-effective” civil investigations to collect tax from evaders, while only using criminal prosecution in the most extreme cases. Furthermore, the new rules on international exchange of information will make it easier for HMRC to locate funds in offshore accounts when they finally come into force. The Chancellor also alluded that the Government will seek to strengthen penalties for offshore tax evasion and seek
to improve incentives for whil- properties valued between £1m and £2m and from April 2016 a stleblowers. further ATED of £3,500 will be introduced for properties valued International Exchange between £500,000 and £1m. of Information From 2014 the UK’s version of the US Foreign Account Tax Overhaul of the UK Pension Compliance Act (“FACTA”) will System Many commentators were see the disclosure to HMRC of information about accounts held caught out by the sweeping changby UK individual taxpayers in es to the current UK pension reits Crown Dependencies and gime. Some of these changes came Overseas Territories. Under these into effect from 27 March 2014 proposals these jurisdictions will and give pension holders greater have until 30 September 2016 flexibility in how and when they to exchange information for the can access their pensions. This is calendar years 2014 and 2015 viewed as a favourable measure with HMRC. From 30 September and it is anticipated that in the 2016 onwards information will be 2014/2015 tax year alone this will reportable to HMRC by 30 Sep- benefit around 400,000 individtember following the end of the uals. relevant calendar year. From April 2015 the Government is proposing that individuals will be able to access their defined Non residents – CGT on UK contribution pension fund in full residential property From April 2015 non-UK resi- or in part, subject to: dent individuals will be liable to • being aged over 55 years; and Capital Gains Tax (“CGT”) on the • being taxed at their marginal rate of income tax in the relevant tax disposal of residential property year. situated in the UK. Until such time as HMRC publish their consultation document there is little information available, including the rate of CGT payable. The top rate of UK CGT is currently 28%. Annual Tax on Enveloped Dwellings The Annual Tax on Enveloped Dwellings (“ATED”) came into effect in April 2013 where high value residential properties (i.e. £2m an above) in the UK are owned by companies, partnerships with corporate members or other collective investment vehicles. For the current 2014/2015 tax year the ATED is as follows: Property Value ATED £ More than £2m but not more than £5m 15,400 More than £5m but not more than £10m
35,900
More than £10m but not more than £20m
71,850
More than £20m
143,750
However, lower thresholds will be introduced over a period of 2 years. From April 2015 an ATED of £7,000 will be introduced for
The Chancellor has indicated that he intends to give HMRC new powers to make it easier to prosecute individuals that evade tax by hiding funds offshore GIBRALTAR MAGAZINE • MAY 2014
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The tax free cash allowance is to remain at 25% of the pension fund. Individuals can have the security of purchasing an annuity, or take greater control of their finances by accessing their funds. A consultation will also take place with the aim of reducing the current 55% tax charge on any residual pension fund on death. Qualifying Non UK Pensions Schemes (“QNUPS”) A consultation document will be issued in due course to consider the current unlimited Inheritance Tax exemption of QNUPS; again in a bid to clamp down further on tax avoidance. n If you are concerned about any of the above or your tax position in general TFO is ideally placed to assist. In June, Tim Richardson of The Family Office, Irish Town, Gibraltar is taking on the challenge of the Race Across America endurance cycle, to raise funds for Help for Heroes. See page 32 for full details and interview with Tim.
Steve Bold, Partner TFO Tax LLP
The Family Office Europe oversees and provides comprehensive private office services including wealth management, international tax advice, generational planning and high-level advice.
The Family Office Europe aims to help high net worth individuals and their families navigate through the shark invested waters that exist in any offshore jurisdiction, where often the man in the pub has the best ideas on how to arrange your affairs. Central to the core belief of the founders is the mantra that clients should expect the same level of service, integrity, fee transparency and professionalism that they would expect to receive themselves.
The Family Office Europe, its affiliated businesses, TFO Tax Strategies Ltd based in Gibraltar and TFO Tax LLP in the UK, and appointed Advisory Board, are well placed to help with all these client concerns.
The Family Office 15 Irish Town, PO Box 1483 Gibraltar
TFO Tax LLP Peter House Oxford Street Manchester M1 5AN
T: +350 200 62084 F: +350 200 49290 info@tfoeurope.net www.tfoeurope.net
T: +44(0)161 209 3838 F: +44(0)161 209 3836 steve.bold@tfotax.net www.tfotax.net
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