HMRC sees fall in tax evasion info requests to foreign gov’ts

HM Revenue & Customs contacted foreign governments on 490 separate occasions in one year as it sought information on suspected tax evasion, a drop of 150 information requests compared to the previous year.

During the 2012-13 tax year, the Revenue made nearly 500 information requests to tax authorities to find out the value of taxpayers’ assets situated overseas. This was a sharp decrease compared to the 2011-12 tax year, in which Britain’s tax office made 640 enquiries, and a further fall compared to the 2010-11 tax year.

The figures come from international law firm, Pinsent Masons, which said the requests were made under double taxation agreements (DTAs), of which HMRC has one of the largest networks in the world.

The results also indicate that HMRC received 2,466 information requests to help foreign tax authorities with their own investigations into tax evasion.
“High pace”

“HMRC’s efforts to identify those who may be under-declaring overseas income and gains are now running at a very high pace,” said James Bullock, partner at Pinsent Masons. “There is now a global drive against the suspected underpayment of taxes- reflected in new legislation and international agreements to increase the cross border transfer of information.

“Many UK high net worth individuals are now living, making investments and conducting business abroad. A sizeable number will have highly complex tax affairs across multiple jurisdictions and as the amount of information available to HMRC increases, they are likely to come under more intense scrutiny.”

Ireland, the Netherlands and France were identified as the countries most frequently sent information requests by HMRC over 2013. Ireland received a total of 54 requests, a 50% jump compared to the previous year. The Netherlands received a total of 35 requests in 2013, which is an increase of 169%. France received a total of 21 requests, a slight decrease from the 28 received in 2012.
“On-going scrutiny”

Ireland had seen a large number of requests which Bullock said is likely to reflect the large number of people of Irish origin living permanently in the UK.

“Ten or so years ago there was a major HMRC campaign surrounding funds held in Irish bank accounts remaining undeclared in the UK – and there is likely to be on-going scrutiny resulting from this,” he said.

Meanwhile, the growing number of information requests directed at the Netherlands was said to be tied in with the country’s recent tax amnesty, which invited citizens to voluntary disclose any unpaid tax by a fixed deadline to avoid hefty penalties. Bullock said it is likely the Dutch tax authorities now possess “a wealth of information” on which they can draw.

“There is also a very regular flow of professionals with high incomes who alternate between working in the Netherlands and the UK,” he said. “After all, London is closer to Amsterdam than it is to Edinburgh.”

With more than 50 countries signing up to an information sharing agreement in 2014, Pinsent Masons expects the volume of information exchange between countries to continue to expand.

The information sharing agreement – which is coordinated by OECD – is due to come into force in 2016.