Number of offshore bank accounts HMRC received data on trebled to 5.7m last year – putting more taxpayers at risk of investigation

HMRC received data on 5.7m offshore bank accounts last year, more than treble the 1.63m accounts it received information on in 2017. This growing pool of data is being used by HMRC to support its compliance work and means more taxpayers could be at risk of investigation.
 
This data was collected from over 100 countries as part of a global transparency initiative called the Common Reporting Standard. HMRC recently confirmed the information it received so far indicates that one in ten taxpayers has an offshore financial interest.
 
The data HMRC has received means taxpayers can expect to see more investigations in this area.
 
A recent tactic HMRC has used is to send out “nudge” letters to taxpayers with an offshore bank account asking them to confirm that the information HMRC has is correct. The letters are designed to create leads for investigations and may also prompt taxpayers to come forward for fear of being subsequently investigated.
 
As part of its ‘No Safe Havens’ report released in March 2019, HMRC stated that it will continue to use targeted communications with taxpayers, such as letters, and “the full range of powers provided by Parliament” to tackle non-compliance in the UK.
 
Some of these new powers are particularly aggressive. For example, Accelerated Payment Notices enable HMRC to collect tax it thinks it is owed before an investigation is even concluded.
 
HMRC already has huge amounts of data at its disposal. Its Connect database now processes 22bn lines of data and identifies more than 500,000 cases for investigation each year.
 
HMRC also recently confirmed that it will continue to work with tax authorities globally when conducting investigations to ensure that it recovers all the tax that is due. Taxpayers with offshore assets must be careful to make sure they do not become the subject of an investigation.
 
Tax investigations can be costly, time consuming and stressful for individuals who may not have the resources to meet legal fees that arise.