04 Nov 2019
The tax office has been “swamped” with 5.7 million pieces of information about overseas bank accounts held by three million British citizens under the terms of a new international treaty, according to tax experts.
However, HM Revenue & Customs (HMRC) does not have enough staff to investigate the information, according to the tax consultancy BDO, so is instead blitzing the people named with speculative letters asking them to send details of their financial affairs.
The information is coming from 100 countries under common reporting standards (CRS) agreed by the international Organisation for Economic Co-operation and Development. The standards are designed to stop tax evasion, or avoidance, by making governments aware of overseas money held by their citizens. HMRC says in its annual report that the agreement has “created an unprecedented increase in the global transparency of offshore tax affairs”.
Richard Morley, a partner at BDO, says, however, that this flow of data is in danger of overwhelming the taxman.
Research by Pinsent Masons, a law firm, found that HMRC’s investigators last year made 540 requests to overseas authorities for information on the highest-net-worth individuals that it believed may be storing tens of millions of pounds abroad to avoid tax.
The office is seeking the information through Tax Information Exchange Agreements — complex disclosure deals with other countries that can take months to implement. The number of requests is up 24 per cent in a year.
Morley says that far more helpful tax-chasing information could be gleaned from the CRS data if HMRC had the capacity to look at it all.
“That is potentially the real game-changer, but the simple truth is they do not have the staff to act on the information. They have this new computer system called ‘Connect’, which files all of this stuff to them, but no-one can look at it and they are swamped.”
By David Byers, The Times, 2 November 2019
Read more at The Times
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