Analysis by Pinsent Masons found that the number of companies registered without ‘appropriate substance’ in some of the world’s top tax havens is down from 512 to 294 businesses.

In recent years HMRC has cracked down on UK businesses operating in territories it believes to be operating as tax havens.

HMRC now receives details from nearly a dozen destinations favoured by UK businesses for easy establishment due to favourable tax rates. This allows tax officials to identify potential tax dodgers as they have access to the relevant information to start an investigation, as a result of the exchange of data arrangements with many of the jurisdictions.

If HMRC believes UK tax is being avoided or evaded by these companies, it can then carry out investigations into them.

The 11 jurisdictions under supervision are Anguilla, The Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, and Turks and Caicos Islands.

As part of an OECD programme, tax authorities in these countries now send data to HMRC if they identify a British company operating in their jurisdiction that is failing to do enough ‘substantial activity’ in that territory.

Jake Landman, partner at Pinsent Masons, and a specialist in tax disputes, said: ‘There has been a long-term push to reduce the ability of British companies to operate in “tax havens” purely for tax purposes.

‘If British businesses want to claim that they should be paying taxes in places like the Bahamas, rather than the UK, they now need to prove that they are present there in a significant way. That includes factors like having senior management and operating expenditure there.’

HMRC’s crackdown is part of the OECD’s ‘No or Only Nominal Tax Jurisdiction’ project. The project aims to stamp out the use of ‘tax havens’ through increased data sharing between global tax authorities, creation of minimum standards businesses must meet to prove they are operating in a country known as ‘substantial activity’ requirements, and establishment of minimum corporate tax rates in ‘tax haven’ countries.

Landman added: ‘Another key part of the OECD’s clampdown is pushing those countries to improve their own data and systems. That is helping them to identify businesses that are trying to use their jurisdictions without meeting the substantial activity requirements.

 ‘That HMRC now receives fewer reports is likely down to two factors: more companies are now meeting the substantial activity requirements, and fewer large corporates are operating in those territories because it has ceased to be worth their while considering the attention it now attracts from HMRC.’