Assets hidden offshore? Not for long!

Financial information sharing now reaches the Cayman Islands, Isle of Man, Jersey and Guernsey.

On November 5th, Her Majesty’s Revenue & Customs (‘HMRC’) announced that the Cayman Islands had joined the ever-growing list of offshore territories which will now automatically share financial information with them in respect to UK taxpayers who may have accounts there. This follows similar agreements which took place in October for Jersey, Guernsey and the Isle of Man. Clearly the idea is to further aid in HMRC’s clampdown on tax evasion and avoidance.

The Cayman Islands also agreed to become an integral part of the G5 multi-lateral information sharing initiative involving a total of 31 territories including the UK, France, Germany and Spain, based on an earlier agreement with the U.S. and now also including cooperation with South Africa. The transparency of who really owns and controls UK companies is also a key HMRC aim.

This is all an important step towards the creation of a global standard in tax transparency and information sharing, an initiative originally agreed earlier in 2013 between the leaders from the world’s 8 largest economies when the UK hosted the G8 summit. At a similar time, HMRC even admitted that they held 400 gigabytes of data on wealthy individuals using complex offshore tax avoidance vehicles around the world, and were sharing such information with places as far flung as the U.S. and Australia. They were then also formulating plans to combat the systems of ‘profit shifting’ used by larger corporations aiming to move profits from one country to another so as to artificially avoid or reduce tax.

George Osborne, Chancellor of the Exchequer, stated that “it is only fair that people pay the tax they owe. If you are trying to evade tax, we are coming after you.” The message is clear!