Gary Heynes, head of private client group at Baker Tilly, said the practice of holding assets offshore has been in the spotlight recently because of government moves to block tax leakages, but in fact it is worth reiterating that these arrangements have for many years been subject to tax in the UK.
“Assets which are either held directly or placed into trusts or companies overseas, have continued to be subject to UK tax on the person who made the transfer,” said Heynes.
“A common misconception is that income and gains on assets held overseas, such as property, investments, bank accounts, etc. are not taxed in the UK – but that is simply not true.”
Last week HM Revenue & Customs published a consultation paper seeking industry thoughts on its plans to reform two provisions of its anti-tax avoidance legislation. The planned reforms come in response to notification by the European Commission last February that the current provisions were incompatible with certain EU freedom of movement treaties.
However, Heynes said HMRC is unlikely to soften the rules and any individuals who own any investment assets overseas, either directly or indirectly, “need to ensure they are fully disclosing income and gains from these investments on their UK tax returns”.
