The Palace of Westminster, the meeting place of the United Kingdom Parliament. (Photo: WIKIMEDIA COMMONS)
United Kingdom Chancellor Philip Hammond delivered the UK’s autumn budget to Parliament last week, touching on several points designed to further regulate offshore finance.
One of the budget’s initiatives is an updated offshore tax compliance strategy.
“This will build on the substantial progress the UK has made in tackling offshore tax evasion and non-compliance since the government’s previous strategy was published in 2014,” the budget document reads.
The budget also reiterated a promise made in the previous year to introduce legislation to tax income from intangible property — like copyright, trademarks and patents — held in low-tax jurisdictions “to the extent that it is referable to UK sales.”
This legislation is expected to come in the 2018-2019 finance bill, according to the budget.
The document also stated that the government was enacting new legislation to introduce international disclosure rules about offshore structures, which is likely a reference to the much-publicised Sanctions and Anti-Money Laundering Act. The UK Parliament passed that law in May.
While delivering the budget, Mr. Hammond — a Conservative member of Parliament representing Runnymede and Weybridge — said that package of measures would “further clamp down on tax avoidance, evasion and unfair outcomes, raising another £2 billion over the next five years.”
Act Background
A section of the Sanctions and Anti-Money Laundering Act requires the UK government to work with the overseas territories to establish public registers of company ownership. If an OT hasn’t implemented a register by the end of 2020, the legislation states that the UK government should prepare a draft order in council requiring the establishment of one.
Some have argued the impact could be devastating in the OTs: In evidence submitted to the UK Parliament before the current public registers amendment surfaced, the VI government claimed that the imposition of registers could cause a funding gap of $1 billion here over the next decade.
Other industry veterans have said that while it will have some impact, the public registers requirement isn’t likely to be a catastrophic blow to the industry.
One VI financial services professional, who spoke to the Beacon in August on condition of anonymity, said Lord Tariq Ahmad, the United Kingdom minister for the OTs, assured stakeholders privately during his visit this summer that the territory would get to choose how the register is structured.
The minister also said there is much flexibility with the timeline for implementation, according to the professional.
That could potentially allow the VI to delay the actual implementation for several years after the 2020 order in council deadline, making it more likely such a requirement is actually a global standard when it is implemented here.
