Offshore savings account?

Mishomeister

As a more money savvy person I am helping my very good friend with his financial affairs.

He is from an EU country and currently live'ss in the UK. He is undecided whether he will stay in the UK or will move to another EU country.
He has some savings(circa £25k - 28k) which he would like to put away to earn some interest.
As so far he hasn't decided to tie himself with the UK permamently he would not want for any other financial institutions(Banks, HMRS etc.) to know about those savings unless he decides that the UK is indeed the country he is planning to spend the rest of his life at which point he would be happy to pay any tax due on any interest earned.
He came across Lloyds Bank International who do offshore accounts I believe in Jersey and Gibraltar: http://international.lloydsbank.com/

I have therefore 2 questions:

1. Would an offshore account in Jersey etc appear on any UK credit searches or any checks done by HMRC?

2. Can HMRC request Lloyds to provide any info on my friend's offshore accounts? I have heard there is some kind of law that the banks in the UK have to provide HMRC with the info of any investments held offshore by British citizens. However the point is that my friend is NOT a British citizen.

dunstonh

As so far he hasn't decided to tie himself with the UK permamently he would not want for any other financial institutions(Banks, HMRS etc.) to know about those savings unless he decides that the UK is indeed the country he is planning to spend the rest of his life at which point he would be happy to pay any tax due on any interest earned.

He does realise that it is fraud and that information like that is now shared.

1. Would an offshore account in Jersey etc appear on any UK credit searches or any checks done by HMRC?

Yes. The information would be reported.

. Can HMRC request Lloyds to provide any info on my friend's offshore accounts?

They dont need to. They will be told about it. It can also lead to prosecution as well. Although more likely is a financial penalty.

However the point is that my friend is NOT a British citizen.

Regulations are EU.

bowlhead99

Mishomeister wrote: »

As so far he hasn't decided to tie himself with the UK permamently he would not want for any other financial institutions(Banks, HMRS etc.) to know about those savings unless he decides that the UK is indeed the country he is planning to spend the rest of his life at which point he would be happy to pay any tax due on any interest earned.
He came across Lloyds Bank International who do offshore accounts I believe in Jersey and Gibraltar: http://international.lloydsbank.com/

I have therefore 2 questions:

1. Would an offshore account in Jersey etc appear on any UK credit searches or any checks done by HMRC?

In terms of UK credit searches probably not unless it is an account with overdraft facilities. I have an account opened with Lloyds' island premier banking that used to have an overdraft facility and I think it appears on my UK report even through I've converted it into a regular free account. However I have another offshore account which does not. But anyway a credit report is nothing to do with your tax.

HMRC don't/can't routinely simply check into Jersey/Gibraltar accounts... however there is now an annual reporting process where the year end balance (or the ending balance of an account closed during the year) of a UK tax resident, together with amounts credited during the period, will be reported by the bank to the local (i.e. Jersey or Isle of Man or Guernsey or Gibraltar or Cayman or BVI etc) tax authority, and then that tax authority reports to HMRC.

2. Can HMRC request Lloyds to provide any info on my friend's offshore accounts? I have heard there is some kind of law that the banks in the UK have to provide HMRC with the info of any investments held offshore by British citizens. However the point is that my friend is NOT a British citizen.

You are probably confusing multiple things here. Firstly a bank in the UK cannot provide HMRC with the info of investment held offshore because it doesn't know them. Only the financial institution who is holding the investment offshore, is in a position to tell HMRC. Of course, if HMRC was auditing you for tax it could ask to see your UK bank statements and see that there is money being transferred out and enquire where it went. Obviously, HMRC do not audit individuals very often if they don't have cause to.

What you are confusing it with is the requirement for the non-UK financial institution to report the details back to the UK, which I mentioned in my paragraphs above. For that purpose, you may have misheard - it is nothing to do with British Citizens, it's British Residents.

So if you are a UK resident with an account in an offshore location and that location has an agreement with the UK it will be reporting your information. http://www.hmrc.gov.uk/fatca/guidance-uk-cd-ot.pdf And if the account was not 'offshore' in the UK Crown Dependencies or Overseas Territories it would likely be covered by the EU Savings Directive and reported in a similar way. There is no escaping the new rules on international tax information sharing really and there are more to come in the coming years.

However if he is only resident here in the UK and not domiciled in the UK, and he only receives a small amount of offshore income in a year and generally doesn't bring it into the UK, he may qualify to only pay tax on the 'remittance' basis where he actually brings the income back into the UK:

http://www.hmrc.gov.uk/international/remittance.htm#5

colsten

Mishomeister wrote: »

However the point is that my friend is NOT a British citizen.

You don't need to be a british citizen to be liable for UK tax.

Your friend (and you, by helping him) is pretty silly if he thinks he should commit tax fraud.

Furthermore, he would be able to make a lot more interest after tax in UK mainland accounts than in any offshore or EU account. Provided he is able to open UK current accounts, that is, which may or may not be an option for him.