Treasury Minister Eddie Teare MHK has warned that time is running out for Isle of Man taxpayers who have failed to declare income totalling more than £4 million.
Mr Teare said the growing international network of automatic tax information exchange agreements will identify income received by Island residents in other jurisdictions.
And he gave notice that taxpayers have only three months left to voluntarily disclose any irregularities without incurring penalties.
The Minister commented: ‘It is right that everyone should pay a fair share towards the running of the Island’s public services and infrastructure.
‘Taxpayers in the Isle of Man are liable to Manx tax on their worldwide income so anything received in other jurisdictions should be declared here. As the net of automatic tax information exchange spreads around the globe there are fewer and fewer hiding places for undeclared income.’
Since April this year over £1.8 million of undeclared income has been identified, on which additional tax, interest and penalties of more than £300,000 have been collected.
A further £2.6 million of undeclared income has already been identified which will be the subject of enquiries by the Income Tax Division shortly.
The sources and amount of taxpayer information held by the Assessor of Income Tax will increase significantly this year when information will be received automatically on financial accounts held by Isle of Man resident taxpayers in the United States and the United Kingdom.
In 2017 and 2018 the Assessor will also begin to receive such information from almost 100 further jurisdictions which have entered into the same international arrangements including, for example, the Channel Islands and Switzerland.
Currently a taxpayer who voluntarily discloses irregularities in their income tax affairs over a number of years and who co-operates fully with the Income Tax Division can have the penalties normally payable on the additional tax due reduced to zero. This is subject to a number of conditions and the additional tax and interest do have to be paid.
However, from 6 October this year the Assessor will begin to charge penalties in such cases.
Anyone who has omitted or understated their income and wants to regularise their income tax affairs before 6 October 2016 should contact the Income Tax Division as soon as possible.
Details of the current practice can be found in Guidance Note GN 34 “Incorrect Tax Returns”, and transitional arrangements to the penalty regime after 6 October can be found in Practice Note 194/16, both of which are available on the Income Tax Division’s website at:
/categories/tax-vat-and-your-money/income-tax-and-national-insurance/
