As part of their open commitments to being well-regulated,
co-operative and transparent international financial centres, the
Governments of Jersey and Guernsey both announced in March 2013
that they intend to agree intergovernmental agreements
("IGAs") with the UK for the automatic exchange of
tax-related information. Such a move was anticipated following the
earlier IGA announced between the UK and the Isle of Man; the
Cayman Islands have since agreed to follow suit and it is expected
that other British Overseas Territories will fall into line
This follows the earlier announcements by the Governments of
Jersey and Guernsey of their intentions to enter into IGAs with the
United States in connection with FATCA. The reporting obligations
on financial institutions under the US and the UK IGAs are expected
to be similar though the reporting requirements under the UK IGAs
will distinguish between UK residents who are and are not UK
domiciled. A consistent approach should assist financial
institutions in Jersey and Guernsey to comply with and set up
systems to effect the required exchanges of information.
Linked to the UK IGA is a disclosure facility designed to give
an opportunity for individuals with investments in Guernsey or
Jersey to make a voluntary disclosure of any undeclared tax
liabilities before they are challenged by HMRC. This facility is
available until 30 September 2016 to UK resident persons who for
any part of the period between 6 April 1999 and 31 December 2013
have had a beneficial interest in 'relevant property'
(which covers a wide variety of assets or interests either held in
or administered from Jersey or Guernsey, ranging from a single bank
account to complex trust structures). Although the terms are
similar to the Liechtenstein Disclosure Facility (the
"LDF") there are some differences and in particular no
guaranteed immunity from prosecution and only a requirement to have
had a beneficial interest in relevant property in Jersey or
Guernsey on or before 31 December 2013.
Guernsey's Treasury and Resources Minister, Gavin St Pier,
described the IGA as "a step forward not a leap forward"
since Guernsey has exchanged automatically for over two years under
the EU Savings Directive. The IGAs have similarly been welcomed in
Guernsey in the top TIEA
On 11 April 2013, the Global Forum on Transparency and Exchange
of Information for Tax Purposes published its Peer Review Report -
Phase 2 into Guernsey. The report notes that Guernsey has been
exchanging information in accordance with international standards
since 2007 and has developed cooperative relationships with the
competent authorities which gives rise to efficient exchanges of
information. Both Jersey and Guernsey have actively sought and
agreed Tax Information Exchange Agreements ("TIEAs") and
Double Tax Agreements ("DTAs") with other jurisdictions
and in particular OECD, EU and G20 member countries.
The report provides an analysis of the requests received by
Guernsey during the years 2009, 2010 and 2011 from its TIEA
partners. In total only 32 requests were received during this
period from 8 different jurisdictions; 15 requests were satisfied
by information which was publicly available and in respect of 14
requests, Guernsey sought clarification which led to 10 requests
being revised and 4 withdrawn (or no further response has yet been
received). The number of requests will doubtless increase as more
TIEAs come into force and authorities seek to flush out more
details following the automatic exchange of information under the
IGAs when these come into force.
Sting in the UK Budget
Although the new tax landscape for high value UK residential
properties was thought to be settled, there was one unexpected and
radical change announced in the recent UK Budget: the way that
liabilities can be deducted for the purposes of UK inheritance
This will have significant impact on persons who are
non-resident or non-domiciled in the UK and who own high-value UK
residential property and who 'de-enveloped' or are
considering 'de-enveloping' the property for the purposes
of the ATED (the Annual Tax on Enveloped Dwellings - the new name
for the Annual Residential Property Tax). Essentially it appears
that the UK government is trying to ensure that UK residential
property owners who 'deenvelope' are exposed to UK
inheritance tax on the value of the property and those who remain
'enveloped' pay the new ATED and CGT. Persons affected will
need to take further advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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