Tax advice for Arab bankers

Paul McKenna addresses the seminar London - Umar Farooq A former tax inspector says Arab bankers and their clients need to cooperate with authorities, with countries developing intergovernmental mechanisms to crackdown on tax evaders.Andrew McKenna, partner at Manchester-based law firm Smith & Williamson has warned that British and American tax authorities are actively pursuing nationals living abroad - to make sure they are paying tax on investments. McKenna was speaking at a tax seminar organised by Arab Bankers Association at Arab-British Chambers of Commerce in central London. The event, entitled: The HMRC (Her Majesty's Revenue and Customs) and IRS (Internal Revenue Service) Pursuit of Financial Institutions and Their Clients, was a legal insight into the various pieces of cross-border tax legislation. McKenna told Arabstoday: "What we're seeing is that the world is becoming a place where there is nowhere to hide in terms of people hiding assets, evading or avoiding tax. The tax authorities are making real moves, particularly in the current climate, the impact on banks and OECD (Organisation for Economic Co-operation and Development), governments need to generate funds and they're going after tax dodgers." Around 60 bankers from the UK and Middle East attended the seminar to learn about tax legislation from experts in the field. The seminar was moderated by Jawad Ali, Managing Partner at King & Spalding (Dubai) and overseen by George E Kanaan, Chief Executive Officer of Arab Bankers Association. Kanaan told Arabstoday that the aim of the evening was to provide bankers with a basic understanding of "forthcoming legislation," which is "quite complex in nature." "Arab bankers in London have an important client base. Tax matters affect them and their clients, so they have to understand tax matters. The session was quite lively and people asked plenty of questions," Kanaan said. "The banks are acting as policemen for the state. They are looking for the US citizen or the UK citizen, and speaking to tax authorities," he added. The event was based on a series of short presentations from experts, followed by a question and answer session. McKenna, a specialist is tax investigations compared the recently-ratified UK-Switzerland Tax Treaty with the Liechtenstein Disclosure Facility. Both intergovernmental treaties allow for British nationals to cooperate with authorities in declaring earnings and assets, before HMRC come knocking on the door. "The instruments give the government a chance to say, 'tell us about your earnings before we penalise you,' they are facilities for people and entitle them to benefits," McKenna said. Roy Baldwin, McKenna's colleague at Smith & Williamson revealed that the British government has a £32bn tax gap, and the HMRC has developed a strategy to recover that over the next five years. “There really is no hiding place anymore; there was a time about 10 years ago when you could find places where money was hidden, but those times have gone. People have to come clean or pay the price,” Baldwin told Arabstoday Mariano Girlait, Tax Director at BNY Mellon looked at OECD's standardisation mechanisms to bring European nations together in tackling tax problems. He also touched on the rights of banks to reclaim tax by applying to the European Court of Justice. Girlait, who sits on the British Bankers' Association tax committee, also explained US Foreign Account Tax Compliance Act (FACTA) provisions, which allows British tax authority HMRC to liaise with its US counterpart IRS on tax matters. Kevin Conway, tax partner at law firm King & Spalding (London) concluded the evening with an overview of British Non-resident Landlord Scheme, which caters for tax on payment of rent to landlords living outside the UK. Watch exclusive video content from the Arab Bankers Association's tax seminar on ArabstodayTV YouTube channel: http://youtu.be/aAZXACnQkws and http://youtu.be/Kje-M2xqYMg