UK Receives Record Requests From Overseas Tax Authorities
Wednesday, October 31, 2012
The UK tax authority, HM Revenue and Customs (HMRC), has seen a substantial increase in information
requests about UK-based foreign nationals by overseas jurisdictions investigating
tax evasion, according to new research.
International law firm Pinsent Masons found that requests for information about
taxpayers received by the UK government from overseas tax authorities surged
by 18% in the last year. Over the course of the 2011-12 financial year, HMRC
received 1,852 such requests under Double Taxation Agreements (DTAs),
compared with 1,564 in 2010-11. The UK has one of the world’s largest networks
of DTAs, made up of over 100 treaties.
According to Phil Berwick, Director at Pinsent Masons, these figures show that
it is "not just HMRC that is piling the pressure on taxpayers”. Berwick
warned that the jump in requests demonstrates that there are now "very
few places to hide for wealthy individuals who may be trying to avoid tax by
moving their assets around the globe. International borders are increasingly
meaningless for tax authorities’ pursuit of outstanding taxes.”
London in particular will increasingly come under the microscope, Berwick pointed
out, as it attracts ultra-high net worth individuals from a huge range of countries.
“As individuals move their assets to the UK, their home tax authority
will take a keen interest in how those assets have been taxed,” he explained.
The largest number of requests for information came from Norway, which issued
577 requests, followed by France (225), Spain (92), and India (37). Norway has
upped its pursuit of international tax investigations, while French
consulate estimates place London as home to around 400,000 French citizens.
Berwick does not find the inclusion of these jurisdictions in the top five much of a shock.
“The presence of France and Spain in the top five countries requesting
data isn’t surprising. Faced with the prospect of tax increases, it looks
like some of France and Spain’s wealthiest individuals have gratefully
accepted David Cameron’s offer to ‘roll out the red carpet’
for them,” he said.
Nor did the figures come as a surprise to Miles Dean, Founder of Milestone
International Tax Partners, describing them as a "sign of the times".
He said: “The exchange of information between two countries is nothing
new and this is one feature of a double tax treaty. Another mechanism is the
EU Mutual Assistance in Recovery Directive which basically allows one EU member
state to help recover the tax debts of another state. Despite these two channels,
cross-border tax enforcement is extremely complex and can take many years to
come to a successful conclusion”.