RI207

I am in the process of opening an Offshore account. During the application form I declared that I had a property in the UK that is rented out and mentioned that rent I was receiving etc. I am now being asked that as the property is in the UK, please confirm if it liable for tax and if so, provide my UK tax reference number. is this normal? the income from the rent is well within our tax allowances. Why the need to provide your UK tax reference numbers to an offshore bank?

RI207

what I don't understand is that what has my UK property got to do with the Offshore bank.


My UK property is declared as part of my annual tax returns that I do every year. As the income is UK I have to pay any tax that is due however any income outside of the UK is non taxable (as I have been out of the UK for over 3 years).


When I return back to the home that is when the disclosure of my offshore account comes in to HMRC. That is my understanding and therefore wondering why the offshore bank is asking me for my tax reference number.

dominoman

Its likely a CRS requirement.

You'll have heard of FATCA, the US Foreign Account Tax Compliance Act. Well CRS is the international (OECD) equivalent of FATCA. Effectively the offshore bank will have to share information on assets and incomes automatically with the UK.

If you're paying the taxes you are due it isn't anything to worry about.

We're all becoming a little bit American...

RI207

Hi Dominoman - Thanks for getting back.


Yes I questioned them on the why they required it and that is what they said that it is part of the CRS requirement.


Seems like they will not open it unless they have the information and as you say if all my house is in order and I pay the taxes that are due it is standard practice.


Thanks again

The OneEyedMan

This is a good reason why you shouldn't open a UK offshore account unless you really need to. Big Brother snooping into your affairs.

Meow

No more so than having money in the UK and it is far better to keep money offshore than in the UAE. Provided someone is not trying to evade tax, a crime, then there should be no issues.

Info on the benefits of opening an offshore account (plus an easy way to do so) here: https://financialuae.me/2016/01/26/t...ng-for-expats/

Pulaski

Banks around the world have all tightened up on the information that they need to see before they will allow you to open an account, not just in the USA and UK, but everywhere, and if you haven't opened an account recently you may not realise how tight the rules have got. This is especially true in the offshore banking centres as one more major scandal linked to the smaller centres could see the entire country's banking system being cut off from the international banking system.

Already the Swiss banks are under siege and at risk of being shut down for assisting their customers evade taxes. Wegelin & Co, Switzerland's oldest bank was closed in 2012 after getting involved in US tax evasion.

In the case of IR207, you have a possible source of UK income that could lead to tax liabilities in the UK and the bank is only protecting itself because if you have money that could have resulted from tax evasion they they're gonna get sçrewed if they providing banking services that supported your tax fraud. I understand that you don't currently need to pay tax in the UKx but from the banks' perspective, your property in the UK represents a risk.

Sabi Star

Some of these off shore banks are actually closing down - such as Barclays in Guernsey. I think it has not been possible to open an account in Gibraltar for some time. I think many may be less than very efficient.

Pulaski

Despite their protests for a number of years, I suspect that in fact the business model of "offshore" banks has long been based on facilitating tax evasion, plus sundry other crimes, such as theft of national treasuries by tinpot dictators and their cronies, bribes received by arab princes, money laundering by drug smugglers, the proceeds of iffy arms deals, etc. and that legitimate accounts are too small a part of their business for them to be viable.

The OneEyedMan

This is the "conventional wisdom" but I wonder if it is correct.

Yes, if you kick the bucket here, your funds will be frozen for perhaps 2 years. That's a potential downside. If you've got the cash, you can avoid it by coughing up 15K for a DIFC-registered will.

If you move your AED to GBP, you have the certainty of receiving less interest on your cash deposits. Oh, and there's the whacking great capital loss if you need to convert it back.

Unfortunately it's becoming more and more difficult these days to decide how to deploy the fruits of one's labours.

Sabi Star

Correction -I think Saxobank in Gibraltar is still available for accounts.

Meow

Of course it's correct. Advising about finance is what I do.

If you accounts are frozen due to death, without a recognised UAE/DIFC will monies will be distributed in accordance with Sharia law and that is not what 95% of expats would want.

To register a will via the DIFC Probate Registry will usually cost more than AED 15,000. That is their registration fee for mirror wills (it's AED 10,000 for a single will) but as they do not accept any amendments most people will need to draw up new wills. That will be another AED 3-6,000 plus a few incidentals.

For British expats, in most cases, a UK will is also required.

Offshore account can be held in multiple currencies to you only transfer between USD and GBP when suits or you need to.

The OneEyedMan

Is it possible to get a reasonable interest rate from offshore accounts without tying up your money for long periods?

Pulaski

Define "reasonable". The era when you could get any meaningful amount of interest on bank deposits is long gone, and there is no immediate likelihood of it returning any time soon.

Meow

No. There are no "reasonable" rates of interest anywhere these days. You know what UK bank base rate is, right?