UK Residents hiding assets offshore will face an “endgame” when the OECD’s (Organisation for Economic Co-operation & Development) Common Reporting Standard is introduced at the end of 2015.

The automatic exchange agreement between an initial 58 countries including TURKEY & NORTH CYPRUS will leave serial avoiders and those with undeclared foreign bank accounts and assets with few options as their international financial data becomes readily available to national tax authorities.

This will result in a significant increase in the numbers of people caught with undeclared offshore assets following the introduction of the Common Reporting Standard (CRS).

Whereas before a tax authority such as the UK’s HM Revenue & Customs would have to have suspicions about an individual to request information from another country, this information will now be automatically available.  For UK Residents with holiday homes, or holiday rental homes in Turkey this could signal the endgame if they do not seek proper & professional international tax planning advice.

The CRS sets out the financial account information to be exchanged between governments which includes Turkey & the UK.  Financial institutions including banks will need to report the different types of accounts and taxpayers covered, as well as the common due diligence procedures to be followed by financial institutions. The information that will be exchanged includes account balances, interest, dividends, and sales proceeds from customer’s financial assets.

Early adopters

Fifty Eight “early adopter” jurisdictions have already signed up to start collecting information as early as 2015 including the UK, Turkey, Spain, France, Portugal, Malta, the Isle of Man, Jersey, Guernsey, Gibraltar, Cayman Islands, and the British Virgin Islands.

“A lot of banks and governments will have to get their systems in order,” he said. “They may have to look at how they can technically gather the mass of information required to participate in CRS.”

The CRS agreement has been designed to transfer information that for many years has been collected by financial institutions about customers anyway, meaning it will not be a “huge jump” for the banks in many countries.  Rather than just gathering the information, and providing it on selected taxpayers when requested, now [financial institutions] will be required to automatically provide it.

The common OECD automatic exchange of information model, is a result of the pressure countries around the world are under, from reduced tax revenues and an increasing social burden as a result of the global financial crisis. Hunting down offshore tax evaders & holders of undeclared Foreign Bank accounts is one of the many tools to try an increase countries tax take.

The introduction of these new international reporting standards is proof in the pudding that Turkey can no longer be seen as safe backwater to hold undeclared bank accounts and assets.  If you think that the new exchange of financial information rules will affect you please send email enquiries to: scott@astutefma.com