View the article online at http://citywire.co.uk/wealth-manager/article/a640042
Channel Islands surrender client confidentiality to UK 'son of Fatca'
by David Campbell on Dec 10, 2012 at 10:37
While details of how the mechanism works remains unclear, most analysts said the assumption would be that any agreement would closely follow the US precedent.
Information sharing on clients’ tax status would be automatic, and non-compliant businesses would be subject to withholding provisions of up to 30% against income arising in the enforcing states.
Under a second round of enforcement due to take effect in 2017, businesses in non-compliant states will be subject to a so far unspecified penalty when they enter any transaction with businesses in compliant states.
In the case of the UK, this would presumably mean all clients with financial arrangements in the Channel Islands or Isle of Man would see their details automatically shared with HM Revenue & Customs (HMRC). While the UK could enforce its own sanctions, by far the greater challenge to the islands would be denial of compliance with US Fatca, which would put them far outside the financial mainstream.
Tax has emerged as a key reputational risk in recent years, and several celebrities and businesses have been publicly pilloried for using what were perceived as aggressive tax avoidance structures.
Starbucks in particular has seen its reputation tarnished by its tax arrangements, which allowed it to pay no corporation tax on sales of £398 million.
The company said this week that it would change its tax arrangements to ensure it paid corporation tax.
In a report on Monday, the parliamentary Public Accounts Committee said HMRC needed to be ‘more aggressive and assertive in confronting corporate tax avoidance’.
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