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Moving overseas assets to non-disclosure jurisdictions risks criminal investigation, says Skandia

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A consultation paper issued by HMRC, which plans to make it a criminal offence to evade offshore tax, will directly impact those investors looking to move money to non-disclosure jurisdictions.

HMRC will “prioritise for criminal investigation” those who move out of a jurisdiction with a disclosure agreement in place in an attempt to escape scrutiny.
 
Research by Skandia International, part of Old Mutual Wealth, has found that 38 per cent of advisers with clients holding offshore assets say their clients are starting to prefer other non-disclosure jurisdictions for investing their money. The new proposals mean that anyone taking such action, and moving money to a non-disclosure jurisdiction, will be prioritised for criminal investigation by HMRC.
 
HMRC has also issued a subsequent consultation paper outlining proposals to impose tougher penalties for those evading UK tax by placing their money in a non-disclosure jurisdiction. The tougher penalty is 100 per cent greater than if money is placed in a disclosure jurisdiction.
 
Skandia says investors need to think carefully about what actions they take. Moving money to a non-disclosure country could be very short sighted and will, if the proposals are introduced, have serious criminal implications, even if they did not ‘intend’ to avoid paying any tax.
 
Placing the investment into an offshore bond means the investment can grow free from tax (other than withholding taxes on the underlying funds) making it a more efficient investment going forward.
 
The consultation period is due to close 31 October 2014.
 
Rachael Griffin, head of technical marketing at Skandia, says: “Investors with undisclosed overseas assets cannot afford to stick their head in the sand. HMRC are determined to tackle overseas tax evasion, regardless of whether there is any intent to avoid tax. Moving overseas assets to non-disclosure jurisdictions just delays the inevitable, and investors need to think carefully about their actions. Taking the bull by the horns and disclosing assets doesn’t have to be that painful. With professional advice, investors can still make their assets efficient from a tax and reporting perspective.”

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