The Income Tax Division is offering guidance to residents who may be worried about increased scrutiny of their income from off-Island as a result of new global standards of tax co-operation.

The Division currently receives interest information from local banks and from financial institutions in the EU. Later this year it will receive information from US financial institutions and in 2016 it will start to receive much more detailed information from the UK on a much wider range of financial products and income sources. The following year it will start to receive this wider and more detailed information from many more countries. A full list of the countries committed to exchanging this information can be found here.

A spokesperson explained: ‘The Division regularly compares the information it receives with what is declared on tax returns and will make enquiries where there is a material difference that it cannot reconcile. Receiving one of these letters does not necessarily mean you have additional tax to pay, but it does mean you need to check your records and contact the Division as soon as possible. If additional tax is payable as a result of an enquiry being commenced by the Division rather than you voluntarily coming forward, a penalty in addition to the tax payable and interest will be charged.

‘If you think you may have submitted an incorrect tax return for any reason, rather than worrying about receiving a letter from the Income Tax Division, please contact us. When taxpayers contact us and explain they may have made a mistake, even if it has been going on for a number of years, they will be treated fairly and with respect. In these circumstances we would not charge a penalty; we calculate any tax that is due and any interest for late payment. If you are worried about how you will pay we will work with you on this too. If it turns out no tax is due we will confirm this.”

More detailed information on what to do if you think your tax return might be incorrect is available on the Division’s website here.