Thousands of the GCC?s wealthiest nationals with money in the UK on Wednesday came under renewed scrutiny in the British government?s fight against tax evasion.
All banks or financial institutions with branches in the UK, including Arab and Swiss companies, will be affected by the crackdown and legal experts predict the move will affect "huge numbers" of Arabs who currently hold money in the UK.
From Wednesday, the UK?s HM Revenue and Customs (HMRC) can force hundreds of banks and financial services providers to disclose information about clients with UK addresses who have offshore interests. Thousands of Arabs - if they qualify as a UK resident by spending more than 183 days a year in the country or an average of 91 days over four years - who have money locked up with UK banks or Arab banks with branches in the UK, face having their financial details poured over by the British government.
?It?s bad news. All the money that is held [by Arab banks] in accounts in London is now going to be subject to this intrusive examination,? said Al Harith Sinclair, partner at law firm DLA Piper Middle East.
?If I was sitting here as a brand new billionaire, and someone asked me ?where would I put my money, I wouldn?t put it in London?,? he added.
This comes amid a huge drive by the UK authorities to claw back money from tax evaders, as the Treasury?s revenues have been hit hard by the economic downturn.
Over the past two years the government has only targeted specific organisations. But this latest move by the UK is being seen as a massive escalation in its fight against tax avoidance.
Banks and financial institutions who are served with a compulsory disclosure notice by HMRC have 30 days to appeal, after which they must handover details of every customer with a UK address.
Sinclair said there will be a "huge number" of Gulf Arabs together with many individuals in Dubai that will be affected.
?They [the UK tax authorities] will want to know about people with an address in the UK and then will try and find out what they are doing abroad,? Sinclair said.
?Let?s say they force HSBC in London to disclose details about people that have invested in the UK. Those details will include the fact they have an associated HSBC account or some other kind of account where money is going to abroad, or is coming from abroad,? he added.
?They will check whether the person is a UK resident, and then go after them and try to take a load of tax.?
Individuals have a six month amnesty period starting on Sep 1 this year to declare and pay unpaid taxes in return for more lenient penalties.
See comments on this article at www.arabianbusiness.com
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Off the Press Paper - Global Retail Recruitment
Friday, 14 August 2009
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