Senior officials from HM Revenue & Customs (HMRC) visited Israel in December 2016 to discuss the current topic of tax transparency, and in particular how to do business in a tax transparent world.
HMRC met with senior officials from the IsraeI Tax Authority (ITA) to build on an open dialogue and to make a clear statement of intent for the two jurisdictions to further build their relationship. This is most relevant given the upcoming automatic exchange of information between Israel and the UK. 101 jurisdictions have committed to data exchange in 2017 or 2018 under the Common Reporting Standard (CRS).
The British Embassy and BDO UK co-hosted a thought-provoking breakfast seminar exclusively for the banking community to discuss tax transparency and its impact on banks and its clients. Dror Goldstein from the Regulation Unit of the Banking Supervision Department represented the Bank of Israel and spoke about recent developments for Israeli banks. A key point discussed was the level of responsibility for bankers to ensure that their international clients are tax compliant. Barry Grossman, Director of Trade & Investment at British Embassy Israel affirmed that “The UK and Israel are joining hands to promote transparency and fight tax evasions in both countries. Automatic exchange of information will make offshore tax evasions more difficult, and assure that no tax haven is safe. This agreement is another example of the growing and strong business links between the UK and Israel.”
In a special lunch seminar, co-hosted by BDO UK and the Israel-Britain Chamber of Commerce (IBCC), over 100 advisers and professionals had the opportunity to hear directly from HMRC. Anita Leviant, IBCC President, reiterated that “Any international business activity must be accompanied with professional local advice. The world is moving towards transparency now and there is no place for tax evasion. The IBCC promotes business relationships and opportunities between Israel and the UK and encourages its members while doing business with the UK to review all compliance requirements in both countries.”
HMRC emphasized that tackling offshore tax evasion is a priority. It also took the opportunity to discuss the new Worldwide Disclosure Facility (WDF) which opened on September 5, 2016. This is a last opportunity for taxpayers with UK undeclared tax liabilities to come forward voluntarily to resolve their tax affairs. The terms of the new facility are tougher than any previous facility. The clear incentive is to disclose now before information is exchanged under the CRS.
HMRC also discussed a new statutory requirement to correct past tax returns which is legislated in the Finance Bill 2017. This legislation encourages taxpayers with offshore financial interests (including offshore structures and Trusts) to review their tax affairs to ensure that their UK Tax Returns are complete and correct for all tax years to 5 April 2016. The window of opportunity to correct these tax returns by making a full disclosure ends on 30 September 2018. Again, this is a final chance to resolve historical issues before information is exchanged under the CRS.
Claire Shelemay of BDO UK also emphasized the need for disclosures to be made now before the UK and Israeli Tax Authorities receive information and open civil or perhaps criminal investigations. This will inevitably lead to more risk and higher penalties. Claire also concluded that there is an opportunity now for taxpayers with offshore structures to review their affairs for peace of mind that all structures have been implemented correctly in light of rule changes over the years. It is this certainty which is surely the most valuable asset in the current environment.
The underlying message was that now is the time for advisers and clients to review offshore issues before the world becomes tax transparent.
Claire Shelemay has been with BDO for over 10 years and moved to Israel 3 years ago. Her expertise is in solving tax issues for UK residents with offshore assets and for Israelis with UK assets.
Published by Globes [online], Israel business news - www.globes-online.com - on December 29, 2016
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