HMRC plans new assault on offshore tax evasion

The UK taxman is to launch a new crack down on offshore investors by trawling through a massive pile of data handed over by 300 offshore banks and financial services organisations.

HM revenue and Customs also plans to speed up the review process of offshore investments by taking direct action rather than waiting for other regulators to hand over information, said Permanent Secretary for Tax Dave Hartnett.

He threatened that HMRC is at the vanguard of a global assault on tax evasion and will continue to pursue taxpayers who do not pay their dues - and revealed that the days of shielding assets in tax havens was at an end.

“What the UK taxman does today may well be followed by other tax authorities tomorrow,” he said at a meeting in Madrid.

“The world has begun to change. There may well be a place for offshore financial centres but it will be different. There is considerable political will to end banking secrecy and to establish tax transparency as the standard. Such centres will be able to continue only if they are fully transparent.”

Hartnett sees the exchange of tax information on request - which is the basis of the current Organisation for Economic Cooperation and Development (OECD) initiative - as the first step.

“I see automatic exchange of information as the benchmark. That is the position which I would like to reach as standard,” he said.

The Isle of Man has already to share tax data and Hartnett hopes that more jurisdictions will adopt automatic exchange as the basis of agreements between states as a mature approach for international financial centres to adopt.

Tax advisers are warning clients that the HMRC‘s tough stance is not just rhetoric but investors who fail to admit to their offshore liabilities are chased to the courts.

“Anyone who has not disclosed all their offshore income should look at their position rationally: it makes good financial sense to come clean now which, for the vast majority, means taking advantage of the New Disclosure Opportunity,” said John Cassidy, tax partner at PKF.