Britain has finally given in to pressure to require greater transparency from its far-flung territories on tax concerns.
Offshore tax havens with lax regulatory environments are the bane of legitimate governments everywhere. Using these tax shelters, individuals and entities can conceal ownership of wealth, assets, and the channeling of money in tax avoidance schemes.
Despite being a primary voice in the global push to penetrate the secrecy around offshore tax shelters, Britain has been resistant to exert governance over its own 14 territories, which are:
- Akrotiri and Dhekelia
- Anguilla
- Bermuda
- British Antarctic Territory
- British Indian Ocean Territory
- British Virgin Islands
- Cayman Islands
- Falkland Islands
- Gibraltar
- Montserrat
- Pitcairn Islands
- Saint Helena, Ascension Island, Tristan da Cunha
- South Georgia, the South Sandwich Islands
- Caicos and Turks Islands
Foreign financial holdings can be legitimate tax shelters and a means to maintain private wealth as long as regulatory requirements, like FBAR, are maintained. The problem is that illegal offshore tax shelters are a very good way to hide wealth, siphon income from strapped governments, launder drug and criminal proceeds, and fuel corruption at all levels. An estimated 11 percent of the world’s wealth is placed in offshore accounts with few regulatory requirements.
The previous British Prime Minister, David Cameron, had pushed for greater transparency in Britain’s territories through the use of open registers that would make ownership of funds and accounts in the territories transparent. Bermuda and the British Virgin Islands are associated with so-called “dirty money” transactions due to their flexible regulatory environments.
With the majority of lawmakers behind it, the government of Theresa May did not oppose the Sanctions and Anti-Money Laundering Bill which requires British territories overseas to create open ownership registers.
Media reports indicate the government was reluctant to force governance on territories where it does not usually interfere. Called the Hodge/Mitchell amendment, the law requires the territories in question comply by December 31, 2020 or face financial penalty.
In an article in The Guardian, a senior manager at ActionAid UK, Jon Date, noted, “These measures will help flush out the corruption and tax evasion that keeps the most vulnerable people in the world – including women and girls – locked in poverty. By accepting this amendment, ministers will ensure that Britain will lead, not follow, when it comes to UK-linked tax havens.”
The measure is expected to reduce tax fraud, money laundering, tax evasion, and the funding of terror groups and regimes. While some territories are expected to rebuke Britain in response, it is not likely to result in withdrawal of the amendment.
In the US and abroad, tax shelters are legitimate—unless they are not. If you have run afoul of reporting deadlines or other compliance measures, speak with an experienced criminal tax defense attorney.
Speak with a knowledgeable IRS tax lawyer in Cleveland
The law offices of Robert J. Fedor, Esq., LLC provide decisive legal representation on criminal tax charges, tax litigation, or other tax controversy. When you become aware you are under investigation, or receive a notice of IRS audit, contact or call us at 800-579-0997 today.
