There has been a hike in the number of requests received by HMRC from foreign governments wanting to know more about the financial arrangements of individuals as more countries clamp down on tax evasion in response to changing attitudes internationally, according to research by Pinsent Masons
The firm’s analysis shows overseas requests for HMRC’s help with tax investigations rose by 45% in 2013, up from 1,701 contacts in 2012 to 2,466 in 2013.
The largest number of requests came from Norway, which made 690 requests to the UK government, a rise of 149 extra requests on the previous year, while there was a 40% increase in requests from Ukraine, bringing the total to 88.
Pinsent Masons says that that Norway has recently stepped up its efforts to recover underpaid taxes, introducing a tax amnesty in 2010 which allows those coming forward voluntarily to pay just the taxes and interest due, instead of the normal penalty of 60%.
The rise in requests from Ukraine may be associated with attempts by the new government there to tackle longstanding political and economic difficulties.
Yuri Botiuk, partner at Pinsent Masons, said: ‘The new government is likely to use tax information sharing agreements to assist in its anti corruption drive.
'A lot of the information they receive will be about perfectly legitimately acquired assets, but it will also be valuable in helping them to identify any individuals who may have acquired wealth, placed it overseas and be under-declaring it for tax purposes.’
There have also been smaller increases in the number of requests from France (232 requests), Poland (149) and Spain (101).
Pinsent Masons says that the high number of overseas High Net Worth (HNW) individuals and business people living and investing in the UK is a key reason for the high volume of requests received by the UK.
James Bullock, partner at Pinsent Masons, said: ‘Inevitably nearly all of them will have relatively complex tax affairs, and with the cross border exchange of tax information increasing, their chances of coming under the spotlight of their home countries’ tax authorities are growing.
'Even countries that do not have a desperate need to shore up their public finances are stepping up their fight against tax evasion, because it makes sense to use the new ways to obtain information that are becoming available to them.’
Bullock said levels of information exchange are likely to continue to intensify following the move by 51 countries in October 2014 to sign up to an automatic information exchange agreement coordinated by the OECD.
