According to Isle of Man Today, the island is concerned about pressure from HM Revenue and Customs and the possible cancellation of withholding tax exemptions under the EU Savings Tax Directive. The IRS has recently begun sending letters to UK residents with offshore accounts asking them to explain why no withholding tax has been withheld on assets in their accounts. The Isle of Man Today publication states: “The actions of the UK Internal Revenue Service are contrary to the recently enacted Directive. The latter grants the right to UK residents, in exchange for payment of withholding tax at a rate of 15% in respect of interest on deposits, not to provide the IRS with information about their accounts. The UK government uses information obtained from unknown sources to coerce account holders to provide information. If this policy is continued, the ability to pay withholding tax to protect personal savings may become useless. ”However, KPMG Senior Tax Manager Paul Hotchkiss believes that for the UK IRS the two issues are separate. “Today in the UK there is an obligation to report income regardless of where it comes from. The taxpayer has the right to pay tax at the source, but this does not exempt him from this obligation «.
