The taxman has blown the lid off the offshore interests of millions of Britons – from holiday homes to secret Swiss bank accounts and investments buried in the Caribbean.
Armed with new international tax data and tougher penalty powers, HM Revenue & Customs (HMRC) is understood to have sent out tens of thousands of warning letters to UK residents making money abroad.
As a result, more than 1,000 tax bills have been mailed this year — some demanding that sums of more than £100,000 be paid in less than a month.
And it is not just tax dodgers who are facing huge bills. Tax accountants say those with rental properties abroad or investments in foreign accounts are often unaware they need to declare income to the UK Government.
It comes as tax experts expect HMRC to crack down on offshore tax avoidance to help fund the coronavirus recovery.
The offshore financial interests of millions of Britons have been handed to HMRC since 2018, following an international agreement signed by more than 100 countries.
Meanwhile, the taxman has been equipped with greater powers to punish late and unpaid bills from offshore earnings with a penalty worth up to twice the tax owed. HMRC can also now demand unpaid tax going back 12 years — twice what it could before.
HMRC says data indicates one in ten UK taxpayers has an offshore financial interest. This could include a holiday home in Spain that is rented out, an inheritance earning interest in a foreign account, or an investment held abroad.
The taxman began to send out tens of thousands of ‘nudge letters’ last year to UK residents revealed to hold money and assets abroad by the Common Reporting Standard agreement.
Tax accountants say many of these people owe nothing and have been alarmed to receive a warning letter.
Tax accountants say those with rental properties abroad or investments in foreign accounts are often unaware they need to declare income to the UK government.
A lot of these arrears go back many years so bills can be significant.’ Laws introduced in 2019 also mean HMRC can claw back 12 years of unpaid tax. Previously it could ask for a maximum of four or six years. If fraud is involved, the taxman can demand tax going back 20 years. Ms Register adds: ‘The changes in law show HMRC really want to punish people who do not come forward and pay UK tax on offshore income and gains.’
In the Budget, the Government said new steps to tackle tax avoidance and evasion would raise £2.2 billion over five years.
There is a perception that HMRC is going to get tougher, the reality is HMRC are getting increasingly more successful at finding people who haven’t declared the correct amount of tax. Their systems are far more sophisticated than people can potentially imagine. There is an enormous amount of data coming into HMRC.
HMRC says it does not send out letters on speculation alone. A spokesman says: ‘We now have unprecedented amounts of information about offshore bank accounts and overseas income.
‘More than 100 countries regularly and automatically share financial information so we can check people are paying the right amount of tax. This significant increase in global transparency is playing a major role in helping us tackle tax evasion and avoidance and we’ll continue working to bring more transparency to ensure there’s a level playing field.
‘We’d encourage anyone with offshore income to do the right thing, check their tax returns are correct and let us know if they need to correct any mistakes.’
INVESTMENT SYNERGY - invest in tax efficient syndicated property schemes
تعليقات