HMRC nets £5.7m from expats via offshore data requests

Revenue & Customs’ haul from information requests to overseas tax offices has soared seven-fold, from a mere £800,000 to an unparalleled £5.7million, new figures show.

In fact, the Revenue’s MARD team (Mutual Assistance in the Recovery of Debt) last year increased the £796, 835 they netted in 2013 by a mega 615% -- to return almost £6million.

The team hit their record haul (up from £2m in 2016) thanks to their 1,006 requests to foreign tax authorities for details on expat Brits, says Access Financial, which obtained the figures.

The overseas contracting advisory said that this means in 2017 alone, HMRC’s yield per taxpayer that they probed in EU and some non-EU jurisdictions came in at a hefty £5,664.

According to HMRC, the MARD team is empowered to take legal proceedings to enforce a foreign debt claim, just as might be taken to enforce a corresponding UK claim.

The team has been emboldened by the Global Reporting Standard, launched last summer and providing HMRC with automatic information exchanges since September 2017.

Most European nations are included (as are the Crown Dependencies), but another 50 jurisdictions, including Switzerland and Monaco, will add to the exchanges from September.

“People tempted by…[offshore tax avoidance] schemes need to clearly evaluate the risks, which are much greater now than they have been in the past,” Access Financial warned.

“Schemes have been widely touted and these can be tempting to contractors operating in continental European markets, where the tax burden can be significantly higher than the UK.”

The advisory pointed out that contrary to some adverts, HMRC does not grant approval to schemes, but it can now compel taxpayers to pay potential liabilities up front (using APNs).

On top of HMRC’s greater powers and its “more systematic” exchange of taxpayer details, it also seems to be prioritising getting the most it can per expat taxpayer it probes.

“[HMRC] can demand backdated tax, penalties and interest,” added Access Financial’s managing director Kevin Austin, referring to users of schemes deemed non-compliant.

“For incomes or assets outside the UK, HMRC can impose penalties of up to 200% of the value of the outstanding tax. [And HMRC] is focusing its enquiries on high value targets.”

Austin also said that contractors were still in HMRC’s firing line -- sometimes unknowingly, yet any rule-breaking is now easier to spot in the “joined-up” tax enforcement era.

“Taxpayers who frequently moved between countries [once upon time could] slip between the cracks,” he said, referring to remote and overseas workers like contractors.

“There is an incorrect assumption that people cease to be tax resident in the UK when they work abroad, but very often a UK tax liability will arise on foreign earnings.”

Austin has been making this point in guidance pieces provided to ContractorUK, specifically for Britons contracting overseas, in countries such as France, Hong Kong and Dubai.

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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