Revenue's double-taxation requests slip 40%
The taxman’s energy for pursuing Britons who hide assets overseas seems to have sapped amid fresh figures showing HMRC data requests to its foreign counterparts slumped last year.
In fact, HM Revenue & Customs made 640 requests for information on individuals’ tax affairs to overseas governments in 2011-12, down from 857 requests in 2010-11.
The requests, filed under the UK’s Double Taxation Agreements, were made by HMRC to establish the value of assets a person has declared overseas so it could assess that person’s tax liability in the UK.
But despite an increase in rhetoric from both the taxman and the coalition government about making all Britons pay their “fair share”, the figures show that HMRC requests under DTAs are down by almost 40%.
Law firm Pinsent Masons, which obtained the figures, said that the decline indicates “there is not a bottomless pit” of tax evaders or avoiders for HMRC to target, rather than it suggesting that the Revenue’s appetite is easing.
The firm’s Phil Berwick reflected: “HMRC has begun investigations into thousands of individuals with overseas assets in the last few years, and will probably have picked off most of the low hanging fruit.
“HMRC teams have built up a very extensive picture of the assets they think are undeclared, so they will now be able to adopt a targeted approach”.
Less collaboration with its overseas counterparts under the UK’s DTAs may also stem from individuals coming forward to HMRC under the Liechtenstein Disclosure Facility, thereby saving HMRC from launching an investigation.
However, critics of the Revenue will prefer that the drop points to HMRC’s heavy workload “catching up” with the department’s finite resources, as Mr Berwick also suggested.
“The recent NAO report on HMRC’s compliance performance revealed that HMRC had 41,000 open avoidance investigations. HMRC has pushed very hard on compliance recently and may be hitting capacity,” he said.
According to the DTAs figures, Australia is the most frequently approached country when HMRC is scrutinising a Briton’s tax affairs; followed by Spain (49 requests), and then Ireland (38 requests).
“Taxpayers hiding assets from HMRC overseas are running out of places to hide,” said Mr Berwick. “HMRC will use every tool in its arsenal to find out where people have assets.
“The use of whistleblowers and other forms of covert intelligence shows the lengths to which HMRC is going in order to recover missing taxes.”