HM Revenue and Customs (HMRC) will gain greater access to details of international bank accounts next year as the part of a crack down on offshore tax evasion.
The tax authority announced that it will receive details of international bank accounts held by UK taxpayers from January next year as part of the “common reporting standard” implemented by the Organisation for Economic Co-operation and Development (OECD).
More than 50 tax jurisdictions have agreed to the OECD’s regulations to automatically share information on financial accounts. These details will reveal taxpayers with undeclared overseas assets and subject them to criminal investigations.
HMRC stated it aims for there to be no jurisdictions where UK taxpayers feel safe to hide their income and assets and for would-be offshore evaders to realise that the balance of risk is against them.
The tax authority wishes for current offshore evaders to voluntarily pay any tax due and remain compliant, and for those who do not come forward to be detected and face sanctions.
Justin King, chartered financial planner at Mfp Wealth Management, said, “If you have a good adviser they are going to move you to a jurisdiction that won’t play ball with HMRC. Anyone who can afford this kind of advice will find another way.
“This effort by HMRC isn’t a waste of time and they need to do something about it. But the world is a big place and if you are very affluent then you can afford the advice that will help you find another way.”
Offshore tax evasion is considered by HMRC to be the use of another jurisdiction’s systems with the objective of evading UK tax. This includes moving UK gains, income or assets offshore to conceal them, not declaring taxable income or gains that arise overseas, or taxable assets kept overseas, or using complex offshore structures to hide the beneficial ownership of assets, income or gains.
Increased emphasis on offshore accounts comes in the wake of evidence revealing that HSBC’s Swiss private bank aided clients in evading tax through provision of large, untraceable amounts of cash in foreign currencies and help them with concealing certain accounts from tax authorities.
The bank issued advertisements signed by chief executive Stuart Gulliver in British newspapers apologising for its past practices at its Swiss private bank, assuring clients and investors that its standards have since been improved.
Meanwhile, the Swiss National Bank recently imposed negative interest rates of 0.25 per cent on large deposits into the country and into sight deposits – a type of instant access account for banks and large companies.
The purpose of the negative rate is to lower the value of the Swiss franc and to discourage individuals from viewing Switzerland as a safe place to stash their cash.