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Inland Revenue attack Offshore Bank Accounts - An Update
(29/08/2006)
Further to last months article on Her Majesty’s Customs &
Revenue gaining access to information on Barclays Bank accounts
in the Isle of Man; we have heard of three cases were
expatriates outside the EU (one of whom is a Candour Consultancy
employee) have been taxed wrongly. With this in mind, it was
interesting to read an article on the amount of withholding tax
deducted recently.
International Adviser stated that Jersey collected £13m and
Guernsey £4.5m in the first 6 months of 2006. On first glance it
does not look that impressive but, if you do the maths:
If
£17.5m was collected at a tax rate of 15%, this equates to
£116.7m of interest paid in those 6 months - or £233.3m per
annum.
At
an average offshore interest rate of 4% per annum, this would
mean £5,833m in deposits where tax has been deducted.
Given that even the Revenue believes that only a small number of
offshore account holders are not paying tax when they should be;
this leads to the conclusion that a lot of expatriates may be
paying tax when they should not be.
As
such, here is a brief reminder of the key points of the EU
Savings Directive that came into force last summer:
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The EU Savings Directive was introduced to ensure all EU
residents are paying tax on all their savings (both onshore
and offshore) based in EU member states and their
dependencies.
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The EU Savings Directive only applies to individuals resident
in a European member state or a dependency of a European
member state.
-
If you are resident outside the EU, you are not liable to
taxation on offshore bank accounts held in the EU; i.e.
Guernsey, Jersey and Isle of Man offshore bank accounts.
-
The EU Savings Directive does not apply to Offshore Investment
Bonds or Offshore Savings Plans from life assurance providers
(such as Aviva, Friends Provident International, Generali
International or Scottish Life International) – even for those
resident in EU member states.
We
urge all expatriates with offshore bank accounts to check their
statements closely to find out whether they are being taxed. If
you are resident outside the EU and are being taxed or resident
in the EU and are not being taxed, please contact your bank
immediately to resolve the situation.
Alternatively, please feel free to
contact us at Candour Consultancy
should you have any queries before contacting your bank. |
