The government has announced that in 2014 HMRC will review how they strategically utilise the data generated from the new automatic exchange of information agreements in place. This follows the negotiations with Europe, the G8 and G20 countries and OECD to establish a new global standard on the exchange of information.
Furthermore, in the 2014 Budget HMRC will propose new enhanced sanctions for individuals who hide assets overseas. Currently penalties can be increased by up to 200% of the tax evaded as a result of hiding assets in non-compliant or opaque jurisdictions.
HMRC have developed software to identify connections between UK residents, their assets and spending patterns to determine whether they are tax compliant. With the prospect of a significant increase in the volume of data being provided by other tax authorities, HMRC’s reach will potentially extend not only to Europe but across the world. UK residents face the prospect of their financial affairs being even more closely scrutinised with HMRC using their CONNECT software.
Where HMRC identify that UK residents have hidden assets overseas they face the prospect of enhanced sanctions, such as tax geared penalties or even a custodial sentence for deliberately understating their tax liabilities. It will be interesting to see how this fits with the free movement of capital under the EU single market.
For more information on these changes or to discuss issues surrounding tax evasion or avoidance contact the TaxDesk on 0845 4900 509 and ask for John Hood.