Summer Budget 2015: Tackling offshore evasion

The UK has already entered into agreements to exchange information automatically with the US under the FATCA legislation and with UK Crown Dependencies under automatic exchange of information agreements. The UK will also receive information from the British Overseas Territories on UK residents holding assets there.

The OECD has also introduced a Common Reporting Standard for the automatic exchange of information between member states, which is scheduled to start in 2017.

From early 2016, following consultation with professional and representative bodies, HMRC wish to introduce legislation that will require financial institutions, tax advisers and other professionals (‘relevant persons’) to notify their clients that information will be automatically exchanged, the type and detail of the information to be exchanged and the criminal and civil penalties that apply in relation to tax evasion.

HMRC realise that it is essential that UK residents are made aware that most states will automatically exchange information from 2017 and that it will be very difficult to hide income and/or gains overseas. This initiative may well be connected to the proposed strict liability offence in relation to non-disclosure of overseas assets.

HMRC believe that there are still significant overseas assets which have not been disclosed. The purpose of this initiative is ‘to shake the tree’ and ensure that UK intermediaries and professionals notify their clients of the risks involved of not ensuring their tax affairs are in order. This is almost certainly linked to the statement that HMRC intend to triple the number of criminal investigations for tax evasion.