The Cayman Islands signed an agreement with the UK that will provide HM Treasury more tax information on overseas accounts owned by UK citizens. The bill mirrors the US’ Foreign Accounts Tax Compliance Act (FATCA).
The Cayman Islands followed British crown dependencies Guernsey, Jersey and the Isle of Man, which all signed UK FATCA agreements last month.
“Alongside the significant investment that the government has made in HMRC’s anti-avoidance and evasion work, these agreements will help them to clamp down further on those individuals who seek to hide their assets offshore,” said in a statement George Osborne, the UK’s Chancellor of the Exchequer.
Under the UK’s scheme (dubbed by some commentators “son-of-FATCA”), GPs with funds domiciled in British overseas territories and crown dependencies, such as Guernsey, Jersey, Cayman Islands and Bermuda must comply with the law.
Fund managers subject to UK FATCA have until May 31 2016 to supply 2014-2015 tax information on their UK investors. Only UK LP tax information recorded on or after 30 June 2014 will be subject to reporting, meaning LPs' 2013 tax information will not need to be submitted, according to HMRC. Cayman, like all other jurisdictions part of UK FATCA, signed a “Model I” agreement that allows local tax authorities to submit information on GPs’ behalf. Under a “Model II” agreement, GPs would need to engage directly with HMRC.
Other domiciles that have yet to sign mandatory UK FATCA-style agreements include the Anguilla, Bermuda, the British Virgin Islands, Gibraltar, Montserrat and the Turks and Caicos Islands.
In related news, the Cayman Islands also agreed to be part of a European FATCA-like information exchange network. Initially agreed between the UK, France, Germany, Italy and Spain, the Cayman Islands will join these countries, as well as Australia and South Africa, who subsequently joined the scheme, in automatically exchanging tax information on foreign investors from their jurisdictions.