In practise the changes will
have very significant on their relationship with their professional
advisers back in the
UK
. Tax evasion is a crime and all UK professionals
including financial advisers, accountants, second hand car dealers,
currency traders, any bank employees, solicitors, antique dealers, estate
agents, art dealers and stockbrokers in fact anyone involved in large
financial transactions now must report every suspicion of tax evasion. They
may also have to report any suspicions from prior knowledge they have. If
they do not report it, they can go to jail for up to five years. It is a
crime not to report any suspicion– no proof is required. Crime
includes tax evasion, tax fraud, fraud, theft, incorrect tax returns,
corruption, price fixing, as well any more obvious crimes such as burglary,
soliciting, product piracy etc.
Not only is it a crime for your accountant etc not to report any suspicion
it is also a crime for them to tell you that they have reported it and they
must deny it if you ask them. It does not matter where the crime is
committed as far as your
UK
adviser is concerned even if the crime, say tax evasion
is committed in
Cyprus
or wherever, it must be reported. Tax evasion is a
crime in nearly all countries with the notable exception of
Switzerland
.
Even if the sum involved is small, a few pounds, then it must be reported.
Even if you did not yourself commit the crime for example if you have
received an inheritance not disclosed by your parents and your lawyer or
other adviser is aware of it, then it must be reported. This is one of the
few cases where even the use of a trust may not help because if the assets
within the trust came from the proceeds of a criminal act (e.g. tax
evasion) then it is reportable.
Even your own lawyer must report. The new laws override confidentiality and
legal privilege in the
UK
unless you seek legal advice because, for example you
have been charged with a crime, then legal privilege applies. Privilege
does not apply however if you talk to your
UK
lawyer for tax or any other type of advice.
Your advisors are not obliged to be able to prove that a crime has
occurred. They merely have to be suspicious, where it is deemed reasonable
to have been suspicious, and they (the adviser) are not suspicious they
have committed an offence.
Anyone at any level who works at the firm must report to the Money
Laundering Reporting Officer (MLRO – an employee or director which
each firm must nominate), and the MLRO must then report to the Economic
Crimes Branch of the National Criminal Investigation Service in London
(NCIS). If your adviser is aware of past offences, then this too must be reported
under the new laws. The latest proposal is that offences which come to
their attention on or after
February 24th 2003
must be reported and this would include anything which
is incorrect about your current and/or future tax returns, even if it
started many years ago.
These regulations are due to start in October 2003 and these draft
regulations seem unlikely to be watered down. In the
UK
there has been little resistance from advisers and
indeed the most activity has been about training staff to spot potential
crime in other words how to be especially suspicious!
If a report is made the authorities will apply the Proceeds of Crime act
2002 that enables the new Asset Recovery Agency (ARA) to recover all of the
proceeds of the crime. This would mean all assets held and not just the tax
due.
If you are not
UK
resident it does not matter any
UK
based adviser must report it. NCIS will then pass the
information over to the relevant overseas authorities of the country in
which you live.
A firm based entirely outside of the
UK
, i.e. only operating overseas is not obliged to meet
these new
UK
rules, even though there may be associations with
companies within the
UK
.
What is for certain is that you should not even think about discussing
problems with any
UK
based adviser as they are obliged to report you .
Ross
Pays is the Chairman of The FAA based in Cyprus. FAA offer advice on wills,
tax registration services, home, health and car insurance, investment
services and tax planning, including Inheritance Tax Planning, together
with full accounting services.
Visit Ross Pays website at www.rosspays.com, Telephone 00 357 25 82 58 76, Fax 00 357 25 33 35 93 or
e-mail ross@rosspays.com
Initial consultations are free and no obligation and
fee quotations will be provided in advance for all services.
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