The defeat of the Labour Party in the May 7 general elections in the United Kingdom does not mean Barbados is off the UK radar when it comes to issues surrounding tax compliance, says a tax investigator.
In fact, he is cautioning Barbadian authorities, companies and UK residents living in and investing in the island to ensure all their ducks are in a row.
Among the Labour Party’s proposed tax policies was a plan to scrap the non-domicile tax status enjoyed by persons who are British citizens but do not pay tax on earnings made outside the UK. The plan called for the implementation of a disclosure regime that would see all UK residents living outside the UK paying UK tax on their foreign income.
More importantly this year, the UK introduced the International Tax Compliance Regulation (2015) of which Barbados is a participating jurisdiction for the purposes of the Common Reporting Standard (CRS). This is designed to, among other things, improve international tax compliance based on the standard for automatic exchange of financial account information developed by the Organization for Economic Cooperation and Development (OECD).
Also of significance is the decision of the HM Revenue and Customs (HMRC) to offer “a Disclosure Facility” to assist UK taxpayers to regularize their tax affairs.
Tax partner at Smith and Williamson in the UK, Roy Baldwin, told Barbados TODAY that he would not rule out the possibility of Barbados being featured more prominently in discussions related to issues of tax compliance.
Barbados has long been a top destination for UK expatriates. It is also considered home for many of the rich and famous from a number of countries including the UK.
“At the moment, we haven’t seen any investigations regarding Barbados, but I would expect that with the new exchange of information agreements in place and the Common Reporting Standards, a lot of information will be flowing into HMRC from countries all over the world and they will be launching enquiries into that information,” he said.
“They have given people an opportunity now to consider their position, come forward and make a voluntary disclosure and save a lot of money. Those who don’t are going to pay phenomenal amounts of penalties after December this year,” warned Baldwin.
He advised that people who think they may be affected by the International Tax Compliance Regulations to seek specialist advice. He added now was the time for individuals, companies and trusts to “regularize” with the HM Revenue and Customs (HMRC) and make a disclosure if they identified any tax irregularity.
“If you have a disclosure to be made, it is not for your normal local accountant or bookkeeper to do. It is for the specialist firms who know how to deal with it and know who to go to and how to fully explain the pluses and minuses of it,” he said.