Post the HMRC’s announcement around cracking down on trusts that are being used to hide wealth overseas, UK residents with access to money through offshore trusts are being advised to check that their operations conform with the current tax laws.
The HMRC will focus on those who are "deliberately evading tax through trusts", such as those that operate in Switzerland, Liechtenstein or the Isle of Man, that are formed under the laws of an offshore jurisdiction.
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There may be penalties charged for residents with overseas trusts who have not been keeping up with the changes in tax rules, and advisors are in the danger of facing a jail sentence for the same.
UK non doms need to pay a fee of between GBP30,000 and GBP50,000 a year for an offshore trust, according to law changes in 2008, and as soon as the money comes into the UK it would be subject to capital gains tax.
Prior to this law, domicile and non-domicile UK residents used offshore trusts and did not pay any capital gains tax.
Gary Heynes, private client group partner, Baker Tilly, has pointed out that succession in law has meant that something that was once viewed as a straightforward asset protection exercise ten years ago may now be regarded as evasion now by HMRC.
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By GlobalData
