https://finance.yahoo.com/news/hmrc-targets-holiday-homeowners-60m-165604747.html
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HM Revenue and Customs is targeting wealthy investors and holiday homeowners as part of a £60m tax crackdown.
The tax office made 2,388 requests for information about taxpayers with overseas assets in 2023-24 – the highest level in at least seven years, according to data obtained in a freedom of information request.
Of the 2,388 requests, 632 were outbound, meaning they were made to foreign tax authorities – double the 331 sent out in 2018-19.
Andrew Park, of Price Bailey, the accountancy firm which made the freedom of information request, said: “We have been seeing increased HMRC scrutiny of wealthy people with overseas assets.
“This is likely to intensify following the abolition of the non-dom tax regime, which will bring more offshore assets within the UK tax net.”
In the same year, HMRC sent out 23,500 “nudge letters”, which prompt individuals to review their tax position because the department suspects they have an undisclosed liability. This was a slight decline on the 23,936 issued the year before. However, the tax clawed back by HMRC leapt up in that period from £19.6m to £57.2m.
Mr Park said the huge jump in revenue may relate to the Pandora Papers, a leak of almost 12 million documents exposing the use of offshore companies and trusts by a global wealthy elite for the purpose of avoiding tax.
“HMRC began issuing nudge letters in 2023-24 to wealthy people named in the Pandora Papers,” he said. “It cannot be a coincidence that the amount generated from offshore nudge letters trebled to nearly £60 million as these taxpayers came under HMRC’s spotlight.”
HMRC receives data from overseas tax authorities in order to identify targets for tax investigations as part of an information-gathering requirement called the Common Reporting Standards (CRS).
By the end of 2022, it had received 9.2 million overseas pieces of information about assets held by UK taxpayers – up from 1.6 million in 2016.
The CRS was developed by the Organisation for Economic Co-Operation and Development in 2014 to prevent people hiding money offshore.
By now around 120 countries have agreed to automatically exchange information with each other, up from 47 in 2016. This includes Switzerland, Bermuda, the British Virgin Islands and the Cayman Islands.
It does not include the United States, which has its own policy called Foreign Account Tax Compliance Act (FATCA).
Failure to disclose overseas assets to HMRC can result in a maximum penalty of 200pc of the tax due.
Mr Park said that HMRC will be relying heavily on requests to foreign tax offices in order to “build a picture of the increased tax liabilities of wealthy UK residents”, including non-doms.
Under the so-called non-dom regime, individuals who are based in the UK but domiciled overseas may avoid paying UK tax on their foreign assets.
But the regime is due to be phased out under the current government’s plans, and Labour has announced it will strengthen these reforms if it gets into power.
A HMRC spokesman said: “We have brought in almost £700 million through agreements to share information.
“More than 100 countries have now signed up to exchange information, significantly increasing the volume and quality of data we receive to combat tax avoidance and evasion.”
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--- quote start
HM Revenue and Customs is targeting wealthy investors and holiday homeowners as part of a £60m tax crackdown.
The tax office made 2,388 requests for information about taxpayers with overseas assets in 2023-24 – the highest level in at least seven years, according to data obtained in a freedom of information request.
Of the 2,388 requests, 632 were outbound, meaning they were made to foreign tax authorities – double the 331 sent out in 2018-19.
Andrew Park, of Price Bailey, the accountancy firm which made the freedom of information request, said: “We have been seeing increased HMRC scrutiny of wealthy people with overseas assets.
“This is likely to intensify following the abolition of the non-dom tax regime, which will bring more offshore assets within the UK tax net.”
In the same year, HMRC sent out 23,500 “nudge letters”, which prompt individuals to review their tax position because the department suspects they have an undisclosed liability. This was a slight decline on the 23,936 issued the year before. However, the tax clawed back by HMRC leapt up in that period from £19.6m to £57.2m.
Mr Park said the huge jump in revenue may relate to the Pandora Papers, a leak of almost 12 million documents exposing the use of offshore companies and trusts by a global wealthy elite for the purpose of avoiding tax.
“HMRC began issuing nudge letters in 2023-24 to wealthy people named in the Pandora Papers,” he said. “It cannot be a coincidence that the amount generated from offshore nudge letters trebled to nearly £60 million as these taxpayers came under HMRC’s spotlight.”
HMRC receives data from overseas tax authorities in order to identify targets for tax investigations as part of an information-gathering requirement called the Common Reporting Standards (CRS).
By the end of 2022, it had received 9.2 million overseas pieces of information about assets held by UK taxpayers – up from 1.6 million in 2016.
The CRS was developed by the Organisation for Economic Co-Operation and Development in 2014 to prevent people hiding money offshore.
By now around 120 countries have agreed to automatically exchange information with each other, up from 47 in 2016. This includes Switzerland, Bermuda, the British Virgin Islands and the Cayman Islands.
It does not include the United States, which has its own policy called Foreign Account Tax Compliance Act (FATCA).
Failure to disclose overseas assets to HMRC can result in a maximum penalty of 200pc of the tax due.
Mr Park said that HMRC will be relying heavily on requests to foreign tax offices in order to “build a picture of the increased tax liabilities of wealthy UK residents”, including non-doms.
Under the so-called non-dom regime, individuals who are based in the UK but domiciled overseas may avoid paying UK tax on their foreign assets.
But the regime is due to be phased out under the current government’s plans, and Labour has announced it will strengthen these reforms if it gets into power.
A HMRC spokesman said: “We have brought in almost £700 million through agreements to share information.
“More than 100 countries have now signed up to exchange information, significantly increasing the volume and quality of data we receive to combat tax avoidance and evasion.”
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