http://www.telegraph.co.uk/news/2017/01/27/taxman-accused-giving-special-help-millionaires-raking-billions/ is an article written by The Telegraph in the UK towards the end of January 2017. It basically says that HMRC are giving favors to the rich by letting them get away with paying less tax.
Really? Would the tax-man let someone with more money pay less tax than someone with less money?
The answer is obviously no BUT what some people seem to miss is that money buys money. In other words, if you have piles of money, you can afford the best advisors and the best structures to protect your wealth. You can allocate your cash to Trust structures, for example to mitigate some or all of the inheritance tax that would be due. You can also mitigate or remove Capital Gains Taxes and Income Taxes. This information takes time and costs money to acquire... which "ordinary" people do not have.
The article does say that HMRC are aware of GBP1.9 billion in cases and are pursuing a big group of professional footballers, their agents and clubs. They have also cracked down on anyone holding GBP20m or more in personal assets over the last few years.
With FATCA (Foreign Account Tax Compliance Act) and CRS (Common Reporting Standard,) it will be much easier for tax offices to find our money as the financial institutes that we hold our assets with are having to report to the local tax office. If you live and work in Hong Kong, your bank will write to you to ask you declare your tax residence during the year. They also join China for 2017 to report for 2018.
The UK and most other European countries started their inquiries in 2016 to report for 2017. You need to be honest on the forms as a record is kept and if the truth is not what you have stated, there could be heavy fines and jail sentences. Tax evasion is illegal in a lot of countries including the USA, Germany and Canada.
Believe it or not but the UK has not yet made it illegal to evade taxes BUT you would have to pay the outstanding if you were caught. One thing to consider though – if the Revenue sends you notice of an inquiry, they can go back up to 20 years for tax they believe should have been paid. If not, then it can only go back four years. Either way, it is better to get in touch to sort things out sooner rather than later – it also has the power to raid bank accounts for money owed.
This status may well change as the UK has been discussing making it similar laws to the USA's - Al Capone could not be jailed for anything else other than tax evasion during the 1920's and 1930's. It will be a short matter of time before all countries start amending tax rules and laws due the OECD's (Organization for Economic Cooperation and Development) CRS.
The top 10 countries hunting for taxes (and evaders) are (in order) Spain, Argentina, Germany, Brazil, Russia, UK, Australia, Canada, Indonesia and New Zealand. Before the implementation of CRS under the OECD, the top ten offending countries for tax evasion was US, Brazil, Italy, Russia, Germany, France, Japan, China, UK, and Spain.
There is a lot of misunderstanding as to what constitutes tax avoidance versus tax evasion. Essentially, the difference between avoidance and evasion is legality.
Minimization of tax liability, by taking such means which do not violate the tax rules is tax avoidance whereas reducing tax liability by using illegal ways is tax evasion.
In other words, you can financially create a structure to assist you in reducing or mitigating your estate taxes including income, capital gains and inheritance taxes BUT you cannot try and hide this money elsewhere, and not report it.
By the way, there are 101 countries that have joined Common Reporting Standards and the USA lead the start with FATCA. There won't be any countries soon that you can hide your money in ... and these countries that do not join, will be harder to get your money out of.
It is far better, and will give you peace of mind to structure your estate so that it is totally transparent, even to the tax-man. These structures are private and confidential but if the tax-man inquiries about it, everything is visible. It will not get you or your family into any trouble and actually works to help you and your family now, and when you pass away.
Please feel free to contact me with your own situation and requirements. Estate planning is always a bespoke service as everyone's situation is different to the next persons.
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