Over the past year, the sum of money that HMRC has received from requests for information to foreign tax authorities has almost tripled.
According to a Freedom of Information Act request by Access Financial, a company of contractor accountants, HMRC received £5.7m from its requests to foreign tax authorities in 2017. In 2016, it received £2m, and in 2013, it received £796,835.
In 2017, HMRC made more than a thousand requests for information on expat British taxpayers to foreign tax authorities. This yielded £5,664 per taxpayer.
The HMRC group that makes the requests is the Mutual Assistance in the Recovery of Debt (MARD) team. It can, if the need arises, take legal proceedings for foreign debt claims just as it does in the UK to impose a debt claim. The MARD team can also recover tax debts from within the EU and from some non-EU countries.
Access Financial warned that British expats caught by HMRC can receive much higher penalties if the asset or income on which they owe tax is outside of the UK. The penalties can be as high as 200% of the remaining tax.
Kevin Austin, Access Financials Chief Executive, said: “HMRC has stepped up the volume of requests for information on British taxpayers working abroad and is focusing its enquiries on high-value targets.”
The Global Reporting Standard (GRS) initiative began last summer, and the first exchanges of information occurred during September 2017. Most European countries, the Crown Dependencies and overseas territories take part in the initiative. From September 2018, 50 countries, including Monaco, Switzerland and Singapore, will start exchanging information.
This means that those who use off-shore tax solutions should be wary of schemes claiming that they can greatly increase take-home pay. With increasing information exchanges between tax authorities, they could face stiff penalties.