The UK and Isle of Man are to sign a tax information sharing agreement, using a recent UK-US bilateral pact over the Foreign Account Tax Compliance Act (FATCA) as a template, and further deals with Guernsey and Jersey could be in the pipeline, the UK government announced late last week.

The deal is among measures being developed by the jurisdictions to combat tax evasion, according to a statement. They will automatically exchange a wide range of information on tax residents, on a reciprocal basis.

“To minimise burdens on financial institutions the agreement will follow, as closely as practicable, the UK-US Agreement to Improve International Tax Compliance and to Implement FATCA. The agreement will be concluded to the same timetable as the agreement currently being negotiated between the Isle of Man and the United States,” the statement said.

“This agreement will significantly boost the UK’s ability to tackle cross-border tax evasion. Automatic information exchange is an important tool in boosting HMRC's ability to clamp down on those who seek to hide their money overseas. Our ground breaking agreement with the US sets a new standard in international tax transparency and today’s agreement between the UK and Isle of Man to move to much greater levels of automatic exchange is the next step in this process,” David Gauke, exchequer secretary to the Treasury, said.

“For years people said this couldn’t be done, so I welcome the progress we have made so far with the Isle of Man. We are looking to reach similar agreements with other jurisdictions and are in discussions with Jersey and Guernsey about enhanced information exchange as part of our common commitment to combat tax evasion,” he said.

Details of the necessary operational and implementation requirements are still being discussed and will be announced in due course, the statement added.

In reaction, Mark Field, member of parliament for Cities of London and Westminster (Conservative) said: 

“I strongly support the Isle of Man; it deserves credit for taking this decision and adopting the new tax information sharing agreements with the UK. There is strong evidence that the standards of tax information exchange are inevitably changing. To compete in a global market place and attract international business countries like the Isle of Man need to remain responsive to the changing regulatory agenda. Clearly this recognises that the need to minimise the cost of compliance for business is key”.