News Search

Industry News

Switch to OECD bank account reporting will cost UK non-doms their privacy

Monday, 3 November, 2014

The general adoption of the OECD automatic information exchange agreement will deprive UK non-doms of their right to keep offshore assets secret from HM Revenue and Customs, according to law firm Pinsent Masons.

Last year, the Crown Dependencies and British overseas territories came to an agreement with London that their banks would routinely inform HM Revenue and Customs of any bank accounts operated by UK taxpayers. An exception was made, however, for non-domiciled UK residents (non-doms), who are not generally liable for UK tax on their non-UK assets and income. For these clients, the overseas banks only have to report the income they remit to the UK, which is liable to UK tax. This concession to non-doms is referred to as the 'alternative reporting regime'.

These agreements apply to the calendar years 2014 and 2015. After that, these financial centres will drop the UK agreements and fall into the OECD's so-called Common Reporting Standard (CRS) scheme, notes Jason Collins of UK law firm Pinsent Masons.

In its current form, though, the CRS scheme does not contain any exemptions for non-doms. Signatory jurisdictions must collect and report information on all bank accounts and trust assets controlled by non-residents.

'From 2016 onwards, offshore banks and trustees in these jurisdictions looking after wealthy foreigners living in the UK will have to report on the entirety of the assets they hold for that person, even though this information is not needed for UK tax purposes', says Collins. 'It is a huge invasion of privacy, as well as a data protection risk.'

There is still time to try to negotiate an exemption with HM Revenue and Customs, but the issue has not yet been generally recognised and little lobbying has been done, says Collins.

  • The problem will also extend to wealthy individuals with assets in the early adopter countries such as Liechtenstein, Malta and Luxembourg from 2016, and other major financial centres including Switzerland, Singapore and the UAE from 2017 as these countries begin reporting on the CRS.


Sources