Tax evasion inquiries by foreign gov’ts soar by 45%

Britain’s tax office has seen a surge in foreign governments making information requests about tax evasion over recent years.

The number of requests to HM Revenue & Customs rose by 45% in 2013 to total 2,466, research from international law firm Pinsent Masons revealed.

Ukraine had the biggest boost in applications to HMRC, increasing by 40% to total 88 requests, which the law firm said is likely to be a result of the country’s current political and economic difficulties.

Norway made the most information requests of any country during 2013, asking 690 times, which is a rise of 149 requests over the previous year.

According to Pinsent Masons, Scandinavian countries have stepped up efforts to recover underpaid taxes and now publish details of individual taxpayers’ tax payments in an effort to achieve transparency on tax issues.

Pressure put on foreign tax authorities from their governments to pursue taxpayers suspected of hiding assets and income offshore, was also cited by the London-based law firm as one of the reasons for the rise in foreign requests.

“The UK, particularly London, attracts many high-net worth foreign nationals that come here to live or invest,” said James Bullock, partner at Pinsent Masons. “Some will use the UK as a stable safe haven for their wealth, while others simply see the economy as attractive.

“Inevitably nearly all of them will have relatively complex tax affairs and, with the cross border exchange of tax information increasing, their chances of coming under the spotlight of their home countries’ tax authorities are growing.”

He added: “Even countries that do not have a desperate need to shore up their public finances are stepping up their fight against tax evasion, because it makes sense to use the new ways to obtain information that are becoming available to them.”

The publication of this data comes after the recent tax evasion scandal involving thousands of undeclared bank accounts held in HSBC’s Swiss private banking division.

A total of 51 countries signed up to the automatic information exchange agreement in October last year, and Pinsent Masons said the international exchange of tax information is likely to continue to intensify.