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UK expat collective investment fund holders now risk HMRC tax blitz
| Published: | 13 Nov at 6 PM |
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Wealthy expatriate Brits with investments in offshore collective investment funds are now firmly in the sights of the UK taxman.
Letters have been sent out to a large number of wealthy expats as part of a tax blitz on those using this specific tax strategy. The information required will allow HMRC to use replies under the guise of checking that gains and dividends from the stated funds are being correctly reported on annual tax returns. According to those working on the scheme, research has already identified many British investors with money in the funds.
The crackdown itself is the result of a switch-on of data-swapping software between various tax authorities now allowed by the introduction of the so-called Common Reporting Standard. Over 100 world countries can now share information on British expats who have investments or cash in their individual jurisdictions.
The letter is apparently being sent out as a preliminary ‘one too many’ nudge aimed at wealthy Brits considered more likely to fall victim to certain errors in the system, and also contains a thinly-disguised hint to such investors to get their tax filings in order and up to date by checking their declaration of gains and incomes from the specific funds.
An explanatory folder is included with the letters, giving full details of how each individual fund is taxed and leaving recipients in no doubt they’ve got questions to answer as regards ‘reporting’ and ‘non-reporting funds’. For those who aren’t sure or who have left their investments in the hands of IFAs, collective investment funds require a professional fund manager who pools monies from a number of investments across an investment portfolio, thus spreading the risk.
The funds are also known as investment trusts, unit trusts and open-ended investment companies, with some simply tracking indexes and having no active management. The now ongoing HMRC probe will impact all British expatriates who are still formally tax-resident in the UK and who’ve invested in any offshore collective investment fund. Also in line for income tax issues are expats sourcing gains or income from any UK collective investment of this type.
Letters have been sent out to a large number of wealthy expats as part of a tax blitz on those using this specific tax strategy. The information required will allow HMRC to use replies under the guise of checking that gains and dividends from the stated funds are being correctly reported on annual tax returns. According to those working on the scheme, research has already identified many British investors with money in the funds.
The crackdown itself is the result of a switch-on of data-swapping software between various tax authorities now allowed by the introduction of the so-called Common Reporting Standard. Over 100 world countries can now share information on British expats who have investments or cash in their individual jurisdictions.
The letter is apparently being sent out as a preliminary ‘one too many’ nudge aimed at wealthy Brits considered more likely to fall victim to certain errors in the system, and also contains a thinly-disguised hint to such investors to get their tax filings in order and up to date by checking their declaration of gains and incomes from the specific funds.
An explanatory folder is included with the letters, giving full details of how each individual fund is taxed and leaving recipients in no doubt they’ve got questions to answer as regards ‘reporting’ and ‘non-reporting funds’. For those who aren’t sure or who have left their investments in the hands of IFAs, collective investment funds require a professional fund manager who pools monies from a number of investments across an investment portfolio, thus spreading the risk.
The funds are also known as investment trusts, unit trusts and open-ended investment companies, with some simply tracking indexes and having no active management. The now ongoing HMRC probe will impact all British expatriates who are still formally tax-resident in the UK and who’ve invested in any offshore collective investment fund. Also in line for income tax issues are expats sourcing gains or income from any UK collective investment of this type.
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