The number of serious tax evasion cases identified by HMRC has jumped 18% in the last year to 3,809, up from 3,216 in 2016/17, driven by the information the tax authority has received under the common reporting standard (CRS), according to Pinsent Masons
The common reporting standard allows HMRC to receive information about UK residents with offshore bank accounts. The first information exchanges by 'early adopter' countries took place in September 2017 however, HMRC has been receiving similar information since September 2016 from the Crown Dependencies and Overseas territories, including the Channel Islands, the BVI and Bermuda.
HMRC’s ability to identify tax evasion cases will be further strengthened when it starts receiving data on offshore bank accounts from the next wave of countries under the common reporting standard in September 2018; including Switzerland, the UAE, Hong Kong and Singapore.
The mandatory disclosure regime will also come into force across the EU at a later date which will again provide HMRC with access to even more data. The disclosure requirement will apply to all intermediaries, such as tax advisors and in-house counsel, and even their clients, that are involved in cross-border tax arrangements. Under the regime, member states will automatically share any information they receive.
Jason Collins, partner at Pinsent Masons, said: ‘HMRC is receiving plenty of political encouragement in this crackdown as it looks to increase prosecutions across the board. Both HMRC’s local offices and its specialist directorates are on the lookout for any transaction out of the ordinary that might lead them to a big-ticket tax evasion case.
‘Governments believe that some professionals and banks are still helping clients to be non-compliant, especially by devising ways to avoid reporting. The EU and OECD have set out “mandatory disclosure regimes” to tackle this perceived abuse – meaning professional services firms and banks need to be vigilant that they are not being embroiled in serious non-compliance.’
A serious tax evasion case is defined by HMRC as one involving the evasion of more than £50,000 in tax, or where prosecution is possible. In 2015, HMRC was given a target to triple the number of criminal investigations into ‘serious and complex’ tax crimes by 2020.
Report by Amy Austin
