The Paradise Papers information leak will provide HMRC and other global jurisdictions with further ammunition in the ongoing war against offshore tax evasion, warns Blick Rothenberg
Fiona Fernie, partner and tax investigations specialist at Blick Rothenberg said: ‘This is a huge leak, even in comparison to the Panama Papers, but we need to bear in mind that great amounts of information are already coming to HMRC as a result of the UK Foreign Account Tax Compliance Act (UK FATCA), involving the UK Crown Dependencies and Overseas Territories, including Jersey, Guernsey, the Cayman Islands and Gibraltar.
‘It will be difficult to determine the likely tax take for cost of investigating the raft of information leaked, but the availability of information combined with the formidable array of measures in HMRC’s arsenal should be enough incentive to prompt individuals to review their overseas tax affairs.’
She warned: ‘The risks of not identifying any errors or omissions and failing to correct them have increased dramatically with enormous potential penalties that could be in excess of 200% of any additional tax due.
‘Additionally, claims of carelessness or innocent error will no longer be considered a valid defence.’
Recent years have seen HMRC implement new tools and increasingly punitive measures against those evading UK tax, particularly when in relation to offshore assets.
The range of measures includes the new Requirement to Correct (RTC) legislation and associated penalties for Failing to Correct (FTC) introduced in the Finance Bill 2017.
Requirement to Correct effectively provides a window of opportunity for individuals with any offshore interests to review their position and where appropriate make a voluntary disclosure through the Worldwide Disclosure Facility (WDF) by 30 September 2018.
The September 2018 deadline intentionally coincides with the first full automatic exchange of information under the Common Reporting Standards (CRS), which will provide HMRC with unprecedented amounts of information on UK residents who have overseas interests.
Fernie said: ‘The combination of leaks and tools in HMRC’s arsenal is making it increasingly difficult for individuals to keep offshore matters secret, and those with offshore assets should urgently consider whether these require a review. The responsibility is ultimately in the individual so people must act now as HMRC will be looking closely.’