HMRC ups requests to foreign governments for tax evasion assistance

HMRC has almost doubled its number of requests to foreign governments for assistance in cases of suspected tax evasion over a five-year period, according to figures obtained by law firm Pinsent Masons

HMRC made 1,096 information requests of overseas tax authorities overseas, up 7% from 1,025 in 2015, according to the figures. These requests were made under 'direct tax instruments' including bilateral double taxation agreements, bilateral tax information exchange agreements and OECD information exchange agreements, all of which allow tax authorities to exchange information on taxpayers cross-border on request.

In contrast, only 591 requests of this nature were made by HMRC in 2012.

The law firm says its analysis suggests a number of high profile cases, including those liked to the Panama Papers leak in April 2016, have increased public pressure on HMRC to pursue those suspected of hiding income and assets offshore.

Paul Noble, Pinsent Masons tax investigations expert, said: ‘Enlisting the assistance of foreign tax authorities in tax investigations is a powerful weapon in HMRC's arsenal – one that it is not hesitating to use in its pursuit of suspected tax evaders.

‘A sizeable number of UK-based high net worths and businesses will have complex tax affairs across multiple jurisdictions. As the amount of information available to HMRC increases, they are likely to come under more scrutiny.’

Noble also warned that a number of new initiatives have been introduced in recent months in order to make it easier for tax authorities in different jurisdictions to share information on tax avoidance and evasion between each other. The UK now automatically receives information about taxpayers in the crown dependencies and British overseas territories with tax authorities in those jurisdictions and exchanges information in return, while the OECD's common reporting standard introduces similar arrangements at a global level.

‘Now is certainly the time for those with tax irregularities involving overseas income and assets to correct any historical non-compliance, as draconian penalties of between 100% and 200% of any unreported tax will bite after 30 September 2018,’ he said.

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