From Brookson

HMRC is stepping up its efforts to combat tax evasion and aggressive tax avoidance schemes, according to a leading law firm.

Data obtained by lawyers Pinsent Masons shows that 72 requests for information were made by the taxman to offshore locations such as Jersey and the Cayman Islands throughout 2012. This represents an increase of 26 per cent from the 57 requests made in the previous year and well over double 2010’s figure of 32.

Pinsent Masons says that the rise indicates HMRC is scaling up its quest to catch out individuals and businesses sheltering assets in offshore locations to cut their own tax bills.

“This will send shivers down the spine of those individuals and business with any undisclosed assets in places like Bermuda and the Cayman Islands,” says Reg Day, director at the law firm.

“HMRC is closing the net and will come down heavily on those not paying tax, so individuals and businesses with money sheltered offshore should get on the front foot before HMRC finds out and begins an investigation.”

The tax authority is working closely with Crown Dependencies and Overseas Territories to develop means of rooting out illicit financial activity. Indeed, so-called “tax havens” such as the Isle of Man and British Virgin Islands have been under increasing pressure to cooperate with Whitehall and other global powers as part of the fight against tax evasion and aggressive tax avoidance.

Under proposals put forward by HMRC, officials will be able to access even more data about the offshore assets held by UK taxpayers. The rule would take its lead from the US Foreign Accounts Tax Compliance Act, which requires overseas financial institutions with accounts held by US residents to adhere to a new set of reporting obligations.

Meanwhile, all of the Crown Dependencies and Overseas Territories with major financial centres recently announced their commitment to a new standard of global tax transparency, and some have even signed up to the information-sharing initiative being introduced by the Organisation for Economic Cooperation and Development.

Mr Day points out that the new regulations “will provide HMRC with much more of the information it needs to start enforcement action against individuals and businesses it suspects of tax evasion. Those with undisclosed assets need to be proactive and approach HMRC before it’s too late.”

HMRC is running tax disclosure facilities with most of these financial centres, which allow taxpayers who are not currently paying the right amount to resolve the issue without the risk of penalties down the line.

At the same time, the General Anti-Avoidance Rule is being implemented to root out tax avoidance practices regarding income, corporation, capital gains and inheritance tax as well as stamp duty. Under the legislation, officials will have to judge whether an individual’s or business’ tax arrangements could possibly be considered a “reasonable” course of action.

These new initiatives are aimed at catching out businesses and individuals deliberately trying to hide assets offshore to cut their tax bills. However, with HMRC becoming increasingly sensitive to international tax planning strategies, contractors may wish to revisit their arrangements to ensure that they are on a sound footing with the taxman.

For more on this story go to:

http://www.brookson.co.uk/news/industry/2013/july/hmrc-ramps-up-pursuit-of-tax-evaders/