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HMRC Investigators Reap GBP373m From Wealthy Taxpayers

Thursday, February 18, 2010

Law firm McGrigors has obtained data under the Freedom of Information Act that show HM Revenue and Customs (HMRC) investigators, as part of a special High Net Worth Unit, collected GBP373m from wealthy individuals in the 2008/09 tax year. The amount collected is 21% higher than in the previous financial year, and represents a 360% increase over a five-year period.

The unit investigated some 50,000 wealthy individuals – including foreigners – earning over GBP100,000 and with complex financial affairs involving property and share transactions, paying particular attention to offshore companies and trusts used in such transactions.

Phil Berwick, director of tax investigations at McGrigors, blames the complexity of the UK tax system for the difficulties faced by some taxpayers in complying with tax rules. “Planning structures which were valid when established may no longer be compliant,” he said. “Many taxpayers won’t have reviewed their arrangements since and are being caught out.”

Berwick added: "HMRC has also been aggressively targeting tax avoidance schemes used by wealthy taxpayers over the last few years. The requirement to disclose avoidance schemes to HMRC, which was introduced in 2004, has made it much easier for the taxman to stay one step ahead. Many tax avoidance schemes designed to reduce inheritance tax, capital gains tax and stamp duty have been closed down. The rules on trusts have also been overhauled, making it much harder to use them to reduce tax.”

Wealthy taxpayers were dealt another blow when the Court of Appeal, on February 16, found in favor of HMRC in a dispute involving the tax residence status of a British-born businessman who had moved to the Seychelles in 1976.

The businessman, Robert Gaines-Cooper, had sought judicial review against HMRC’s decision that he remained a tax resident in the UK despite spending less than 91 days there each year.

Gaines-Cooper owns a house in England, which is occupied by his second wife and son, and where he keeps classic cars and a collection of paintings. He had drawn up his will under English law, and sent his son to a British public school. On this basis, the court found that the UK had continued to be his “center of gravity of his life and interests.” He now faces a tax bill of around GBP30m dating back to 1993.

Accounting firms have warned that the ruling could affect other wealthy tax exiles. Mike Warburton, senior tax partner at Grant Thornton, has accused the court of “moving the goalposts” for those who currently utilize and abide by the 91-day rule to reduce their UK tax liability.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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