Responding to an International Development Committee report
earlier this week, the government publicly rejected the need for a UK
version of FATCA, which would require tax authorities to
automatically exchange information relating to UK citizens or
In private, however, the
government has already drafted FATCA legislation which it will
impose on its Crown Dependencies and Overseas Territories.
These include some of the world’s most notorious
tax havens such as the Cayman Islands, the Channel Islands and
the Isle of Man.
The draft agreement, seen by
International Tax Review, will require the automatic
exchange of information for each reportable account of each
reporting financial institution. That will include full details
of all beneficial owners of the account, including those whose
identities might otherwise be hidden by trusts or companies
It will also require the account
number, name and identifying number of the reporting financial
institution as provided when registering with the IRS for FATCA
purposes, and the account balance or value as of the end of the
relevant calendar year or other appropriate reporting period
or, if the account was closed during such year, immediately
The move will come as a huge
blow to tax havens and companies and individuals hiding money
in them. But it is a coup for the Tax Justice Network (TJN),
which has long been arguing for automatic information
"This is a requirement for full,
open disclosure," said the TJN’s Richard Murphy.
"It looks through trusts, companies, who owns the assets.
It’s full automatic information exchange."
Murphy says the UK Crown
Dependencies and Overseas Territories will never be the same
again and he has a simple piece of advice for anyone hiding
money in these locations.
"The evidence is now clear: the
writing is on the wall for secrecy in the UK's tax havens," he
said. "There are now two options for those hiding their funds
in these locations. The first is to own up now.
That’s the wise option. It’s the only
safe option. The alternative is to flee. My suspicion is that
it’s already too late for that to work."
Murphy says he understands that
Jersey is strongly opposed to the legislation, but Guernsey and
the Isle of Man are likely to "roll over and take it".
Malcolm Couch, head of the
income tax division at the Isle of Man Treasury would not
comment on the prospect of a UK FATCA, but said that the Isle
of Man has noticed that discussions on international tax
cooperation have moved to a new place as it has become clear
that FATCA will work.
"Discussions on automatic
exchange of information have come to the fore," Couch said.
"The Isle of Man needs to determine its position appropriately
as things move, but they are moving."
The UK Treasury declined to
comment, but said that it is assisting the Crown Dependancies
and Overseas Territories in their response to FATCA.
Review expects an autumn announcement from the government,
with the legislation coming into effect on January 1 2014.