United Kingdom

UK: HMRC took over £500 million from British taxpayers with offshore interests.

By added on 01/10/2019

As extracted from accountancyage.com, published on Thursday 27th July, 2019.


HMRC netted £560m from investigations into British taxpayers with offshore assets and income last year. This was the first time that HMRC has managed to exceed half a billion pounds, according to information obtained by accountancy firm Access Financial.

According to data obtained under a Freedom of Information Act request, the elite Offshore, Corporate and Wealthy unit, which sits within the Fraud Investigation Service at HMRC, has increased its tax haul by 72% over the past two years, rising from £325m in 2016/17.

“HMRC’s new offshore unit is becoming much better at focusing its resources on the biggest tax threats,” said Kevin Austin Chief Executive of Access Financial. “It is staffed by highly experienced lawyers and accountants and is armed with a vast amount of data and sweeping powers. It has already increased the amount it is netting from investigations by more than two thirds in just two years and this is likely to be a foretaste of much more to come.”

The new Offshore, Corporate and Wealthy unit targets high-net-worth individuals and businesses with undeclared offshore interests. In 2018/19 they made investigations into 827 individuals or businesses, representing an average yield of £677,000 per taxpayer. This is a significant increase on the yield per taxpayer in 2016/17, when 842 investigations were started, resulting in £325m of additional tax being identified.

According to Access Financial, the Offshore, Corporate and Wealthy unit was founded around the time of the Panama Papers leak (2015) and has been receiving data on bank accounts since 2016 from offshore financial centres, including the Channel Islands, Bermuda and the British Virgin Islands.

“The unit is sifting through huge amounts of data, including information on bank accounts from offshore financial centres such as the Channel Islands, Bermuda and the British Virgin Islands. HMRC is able to use this data in conjunction with “Connect”, a software system designed to analyse vast amounts of personal and commercial information and establish links between individual taxpayers and businesses, income, assets and transactions,” said Austin.

“Tax authorities around the world are acting in a more joined-up way, which makes it increasingly important that taxpayers ensure their tax affairs are in order. Gone are the days when taxpayers who frequently worked or owned assets in different countries were able to slip between the cracks,” he added.

Access Financial says that taxpayers caught out by HMRC will have paid considerably more in penalties on top of the overdue tax. This is because HMRC can charge an increased penalty where the income or asset that gives rise to the penalty is held outside of the UK. For income or assets outside the UK, HMRC can impose penalties of up to 200% of the value of the outstanding tax.

Access Financial pointed out that a global tax transparency initiative called Global Reporting Standard (GRS) was launched with the first automatic information exchanges taking place in September 2017. 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.