100 Financial Centres Start Swapping Tax Data
Expats who have money or assets outside Britain can expect to start receiving letters from the UK tax man soon.
Hundreds of thousands of letters are being drafted for expats who have returned to the country after spells abroad and for expats considered UK taxpayers who have had overseas assignments.
The letters to taxpayers from HM Revenue and Customs (HMRC) explain that more than 100 international tax authorities are swapping financial information about local bank accounts and investments controlled by taxpayers from other countries.
“HMRC is already using information, supplied by overseas banks, insurers, and wealth and assets managers, to identify the minority who are not paying what they owe,” said a spokesman.
HMRC is threatening to impose stiff financial penalties of up to 200% times the tax owed plus interest and other charges on expats evading tax. Other penalties can also be based on the value of offshore assets subject to tax inquiries.
In some cases, criminal prosecutions may be considered.
Britain leads tax crack down
Among the countries agreeing to swap tax and financial information under the common reporting standard are traditional British tax havens in the Cayman Islands, British Virgin Islands, isle of Man and Channel Islands.
Britain is also one of the foremost signatories to the US Foreign Account Tax Compliance Act (FATCA).
The tax man is also warning self-employed expats who make payment arrangements with offshore companies to avoid paying the right amount of income tax and national insurance contributions on their earnings are under scrutiny as well.
The spokesman explained that payroll tax avoidance had recently been found illegal in a court and that anyone involved faced legal action if they did not come forward to settle their liabilities.
Making a tax disclosure
Expats who want to report past income tax or capital gains tax misfiling to HMRC can get in touch with the HMRC worldwide disclosure facility or make contact through an accountant or tax adviser.
The facility will stay open to September 2018, when a new regime of tax penalties are introduced.
Expats with UK tax to report can also make declarations under this facility.
“Anyone who wants to disclose a UK tax liability that relates wholly or partly to an offshore issue can use the facility,” said an HMRC spokesman.