The Common Reporting Standard and the race to save tax (and face)!
We all have our time to shine, but this is definitely not Bernie Ecclestone’s as I read that he has apologised for backing Putin and The UK Crown Prosecution Service (CPS) has authorised the charging of billionaire businessman and ex-Formula One chief executive with fraud by false representation.
Ecclestone and Putin have a long-running friendship, and the former F1 boss defended the Russian leader after the war first broke out. When quizzed on whether his stance had changed by Good Morning Britain at the end of June, Ecclestone reinforced that he would 'take a bullet' for Putin. But Ecclestone has seemingly had a change of heart, now issuing a lengthy video apology in which he claimed he had spoken without thinking.
Meanwhile, HM Revenue & Customs (HMRC) has accused the billionaire of failing to declare the existence of assets held overseas believed to be worth “in excess of £400 m. Simon York, director of fraud investigation service (FIS) at HMRC, added: “We can confirm that a fraud by false representation charge has been authorised against Bernard Ecclestone. This follows a complex and worldwide criminal investigation by HMRC’s FIS.
“The criminal charge relates to projected tax liabilities arising from more than £400m of offshore assets which were concealed from HMRC.
“HMRC is on the side of honest taxpayers, and we will take tough action wherever we suspect tax fraud. Our message is clear – no one is beyond our reach.”
Wondering how this could affect you? Read on …
Whilst not many of us are fortunate enough to have the problem of trying to avoid tax on £400 m, there is a very clear message here that HMRC has all the information it needs to prosecute thousands of people. The Common Reporting Standard has changed the game regarding worldwide sharing of information. Add to that the impact of the pandemic on each Governments balance sheets and tax offices, including the Hacienda and HMRC will be looking for as many additional income sources as possible to mitigate the impact of the pandemic. Going after hidden bank accounts and other offshore tax evasion schemes is clearly at the top of the list.
Let’s be clear on one thing here, there is a big difference between tax evasion and tax avoidance … with the latter being completely acceptable whilst using schemes purely with the intention of evading tax will never work long term … the truth always comes out in the end … tax authorities have the unique ability to look through schemes intended to hide assets away from their grasp!
Those reading this who are clients of Speed Financial Solutions will already be familiar with my traffic light system. Ultimately, our aim is to get everybody to green in a tax efficient way.
Whether you’re just about to embark on your new life in Spain, or whether you’ve had your hand forced by BREXIT to become officially resident, I highly recommend that you consider how your finances are set up to make sure you don’t fall foul of either the Hacienda or HMRC, and are able to enjoy life knowing that your savings, pensions and investments are set up in the best possible way.
For those who are not familiar with the Common Reporting Standard I detail below a quick recap of how it came about and what it means to people who live in a different country to where their bank accounts, investments and savings are held …
THE EUROPEAN SAVINGS TAX DIRECTIVE
To provide a little background info, this was the predecessor to the Common Reporting Standard. In summary, the European Savings Tax Directive (ESD) was an agreement between the Member States of the European Union (EU) to automatically exchange information with each other about customers who earn savings income in one EU Member State but reside in another (the automatic exchange of information option).
This Directive, which came into force on 1st July 2005 referred to savings income and may also have involved withholding tax rather than the sharing of information, starting at 15% from 1st July 2005, increasing to 20% from 1st July 2008 and became 35% from 1 July 2011.
THE COMMON REPORTING STANDARD
The EU Savings Tax Directive never truly worked as originally planned, as there were no real consequences for financial institutions in respect of incorrect or non-reporting or withholding tax. This resulted in the introduction of further anti-avoidance measures based on the American FATCA guidelines being introduced, but this time globally with effect from 2016, known as the Common Reporting Standard (CRS). Information regarding investment, savings and bank account balances and withdrawals is now collected automatically on 31 December each year by each financial institution and passed to the tax office of your country of residence if the account is held in a country other than which you reside. Domicile, nationality or citizenship is not taken into consideration.
For instance, bank account details as at 31 December for an account held in the UK will be reported to HMRC on 30 September the following year if you are not UK resident. HMRC then share this information with the tax office of your country of residence, for instance, the Hacienda if you live in Spain.
To summarise, if you live in Spain and have monies deposited in another country information will be shared with Spanish tax authorities each year.
If you feel a little nervous or lost in respect of your reporting requirements, and want to make sure that your finances are set up in the most tax efficient way, talk to us!
Speed Financial Solutions are a highly qualified and fully regulated financial services provider looking after clients throughout Spain and the UK. Established in 2010, we provide a discreet and comprehensive service to individuals, and our service is tailored to suit your needs taking advantage of tactical opportunities as they arise in respect of your financial planning.
Our Principal, Andrea Speed, is a qualified Discretionary Investment Manager specialising in Investment and Risk, Taxation and Trusts, and a qualified Pension Specialist. Andrea is also a Fellow of the Chartered Insurance Institute (CII), which is the world’s largest professional body for insurance and financial services in the world.
Fellowship is the highest qualification awarded by the CII (Level 7) and is universally regarded as the premier qualification. It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels. Along with a Fellowship, Andrea is a CII Chartered Financial Planner.
Please take a look at our website – www.speedfinancialsolutions.com
For further information contact us on Tel 951 315 271 or 951 318 529
We are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Our Financial Review is completely free of charge and without obligation. Follow us on Facebook for regular updates.
This communication is for information purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
Andrea J Speed FPFS (DM), M.A.
Principal, Fellow and Chartered Financial Planner
Speed Financial Solutions
26 July 2022