HMRC nets record income from Brits offshore

HMRC has netted £560m from British taxpayers with offshore assets and income, the first time it has exceeded half-a-billion pounds in successful investigtions of this sort.

According to data acquired from a Freedom of Information Act request, HMRC increased its tax revenue from offshore investigations by a significant 72% over the past two years, building on the £325 recorded in 2016/17.

Associate Director at Accounts + Legal, Riaz Kala, said that following the ‘Panama Papers’ scandal HMRC created its Offshore, Corporate and Wealthy unit, tasked primarily with targeting high net worth individuals and businesses with undeclared offshore interests.

He said: “Staffed by highly experienced lawyers and accountants and armed with a vast amount of data and sweeping powers, the unit has already increased the amount HMRC is netting from investigations by more than two-thirds in just two years, and this trend is likely to continue going forward.

“For example, in the previous tax year – 2018/19 – the unite investigated 827 cases, netting an average yield of £677,000 per case. This is approaching almost twice the yield recorded in 2016/17, with an average of £385,986 collected per case from a total of 842 investigations.”

Another source of HMRC’s success has been the introduction of the Global Reporting Standard initiative, launched in September 2017 with a view to creating global tax transparency, he said.

“Participants in the GRS include most European countries, the Crown Dependencies and overseas territories. Information on taxpayers with accounts based in another 50 jurisdictions, including Switzerland, Monaco and Singapore, began to be exchanged from September 2018.”

The final source of HMRC’s success has resulted from the introduction of a strict liability offence which came into effect in October last year and has made it easier for HMRC to prosecute taxpayers for offshore tax evasion, said Kala.

“The updated legislation has made it a criminal offence to fail to declare offshore income greater than £25,000 and has taken away HMRC’s responsibility to prove intent to evade tax, thus making it much more straightforward to convict those involved.

“This does mean that the likelihood of HMRC tracking down individuals or businesses who have declared incorrect tax on offshore income in the past is far greater than in years gone by. A significant proportion of British taxpayers who are working abroad, or have worked abroad recently, are at risk of facing investigation if they have not paid the correct amount of tax.

“Furthermore, British taxpayers utilising offshore tax solutions, many of which promise high levels of take-home pay, are facing ever-greater risks as information exchange between tax authorities becomes more systematic.”

He added: “If HMRC deems a scheme to be non-compliant, it can demand backdated tax, penalties and interest. HMRC now also has the power to compel taxpayers to pay their potential tax liabilities upfront, instead of having to chase them through the courts.”


Leave A Comment

You must be logged in to post a comment.

Latest News