WHY ARE HMRC SO SLUGGISH IN THEIR EFFORTS TO PREVENT TAX AVOIDANCE IN THIS COUNTRY?
According to a Freedom of Information request by the FT 4,443 individuals confessed to not paying the correct amount of tax on their foreign assets in the years 21/22. This is a rise on 20/21 of 35 %
This at a time when the British public are grappling with high energy bills, increases to national insurance and the Chancellor and his wife under severe scrutiny about their tax affairs.
Warning letters sent out by HMRC giving people the final chance to come clean for a reduced penalty has led to these disclosures. There are international rules for the automatic exchange of information on financial assets, and bank accounts between the world’s tax authorities it is known as the Common Reporting Standard which was approved by 110 countries. Under this standard commonly known tax havens have sign up to the codes to prevent people hiding their offshore income from the taxman and this is getting harder but still doable.
HMRC has all the information they need to prosecute people, so the warning letters are just a chance to get ahead of the inevitable . Under HMRC’s worldwide disclosure facility individuals can disclose all unpaid tax on foreign assets, the penalties are steep and amount to a maximum of 200% of the tax owed. Failing to disclose offshore income is also an imprisonable offence, with a sentence up to 12 months. So why hasn’t the Government done more?
LOW HANGING FRUIT
Contractors seem to be the preferred target to pursue for sums that are dwarfed by the money owed by these wealthy individuals. How much money could HMT have recouped if tax enforcement in the UK was effective, efficient, simpler and fairer….