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Offshore moves aim to close tax loopholes

Following the Government’s presidency of the G20, the Budget announced that a new offshore disclosure opportunity will run until March 2010.

This will give offshore account or policyholders an opportunity to disclose if they have unpaid tax or duties and to then settle these debts.

HM Revenue & Customs will seek to issue and enforce notices requiring more financial institutions to provide information about offshore account holders.

Specific legislation has been immediately introduced aimed at avoidance using offshore life policies where a chargeable-event calculation for the policy shows that a loss and a claim for income tax loss relief has or is to be made.

The measures amend the rules to put beyond doubt the fact that tax relief does not arise on these policies.

Further legislation is being introduced to ensure that both individuals and corporations – in particular, the use of manufactured overseas dividends by banks, the perceived abuse of double taxation agreements and foreign exchange losses – have the opportunity for eva- sion, avoidance or non-compliance reduced.

A number of changes are to take immediate effect to address a number of currently legitimate tax avoidance schemes or practices.

Non-resident individuals will no longer qualify for reliefs and personal allowances and further amendments have been released to clarify the remittance rules in relation to last year’s rules for non-domiciled and not ordinarily resident individuals.

The removal of tax barriers having an impact on the development of offshore funds will take effect from December 1 and the tax treatment of investors in some contract-based offshore funds will be changed.

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