Government Ratifies Foreign Tax Charter


On 24 January 2008 the UK Government ratified the Treaty on Mutual Administrative Assistance in Tax Matters. This grandly-titled agreement allows the UK tax authorities to exchange information with foreign tax authorities and allows the tax authorities of the signatories to assist one another in the collection of taxes due in one country which are unpaid by someone resident in another.
The parties to the treaty are Azerbaijan, Belgium, Canada, Denmark, Finland, France, Iceland, Italy, the Netherlands, Norway, Poland, Sweden, the Ukraine, the United Kingdom and the United States.
UK taxpayers are promised safeguards against inappropriate use of the new powers. These are:
  • taxpayer information will only be supplied to another state when HM Revenue and Customs (HMRC) are satisfied that it will be kept confidential to the same extent as it would be in the UK;
  • taxpayer information will not be provided where doing so would endanger the human rights of an individual;
  • the requesting state must have gone through all necessary legal processes to prove that the tax debt exists before the UK will assist in recovery;
  • the request for information or assistance must be in relation to a tax that is comparable with a UK tax, otherwise the UK will not comply with it;
  • compliance will not be made with requests from other states for information or assistance which is contrary to generally accepted taxation principles; and
  • compliance will not be made with requests for information or assistance where HMRC feel that the cost of providing it would be disproportionate.
The net effect of the agreement is that a UK taxpayer who emigrates to a signatory country can expect steps to be taken to collect any unpaid taxes. Likewise, a foreign national from a signatory country can expect the UK authorities to assist in the collection of any taxes due to that country.
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Partner Note
Source, ICAEW TAXLINE, January 2008.

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