HMRC to wage war on overseas tax dodgers

HMRC to wage war on overseas tax dodgers
New information-sharing powers mean Her Majesty’s Revenue and Customs (HMRC) will be able to catch individuals evading tax abroad no matter where in the world they hide their assets.

Automatic information-sharing between banks means the details of British residents’ wealth - including bank accounts, property and trusts - will be passed directly to HMRC, who will be able to impose fines and criminal sanctions on those found to be evading tax.

The organization has placed advertisements in national newspapers, warning tax dodgers to “come to us, before we come to you.”

Financial Secretary to the Treasury David Gauke said HMRC is committed to stopping people “hiding money in another country at the expense of honest taxpayers.

“Under our new regime the small minority who evade tax offshore, facilitate or turn a blind eye to offshore tax evasion will face tougher sanction,” he added.

The campaign is designed to raise an estimated £565 million (US$850 million) which is lost in the “tax gap” of those who make huge tax savings offshore.

The announcement comes as the government prepares to implement new penalties for people avoiding tax though foreign investment.

The measures, taking effect in the new year, allow HMRC to impose fines on offenders of at least 30 percent of the tax due. Previously there was no lower limit.

As part of the new measures, people who own second homes abroad, have offshore bank accounts, or who fail to disclose income from interest or dividends will be forced to pay what they owe.

The tightened legislation comes into force as the Lichtenstein Disclosure Facility (LDF) expires at the end of 2015. The LDF was put in place by the UK and Lichtenstein governments to allow individuals to declare previously undisclosed assets.

Since the amnesty began in 2009, an estimated £1.6 billion has been collected in overdue tax from Brits.

There’s not really anywhere for people to shelter as more and more countries begin automatic information exchanges,” said Richard Morley of accountancy firm BDO.

HMRC will let the computers do the legwork and, using its new access to previously secret financial details, will make an example of somebody to show a bit of teeth,” said Morley.

“It remains to be seen how they will use their new intelligence and powers, although the rules are hardly intended to imprison unwitting taxpayers who make an innocent error or forget to declare their inherited wealth.”