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HMRC Targets Wealthy Investors in £60m Tax Investigation

Published by Prerana
Posted Date: June 6, 2024 , Modified Date: June 6, 2024

HM Revenue and Customs (HMRC) is trying to track down wealthy investors and holiday homeowners with overseas assets to recover millions of pounds in unpaid taxes.

According to the data obtained from a freedom of information request, HMRC has made 2,388 information requests about taxpayers with foreign holdings. Tax experts believe these actions taken by HMRC are likely due to the abolition of the non-dom tax regime.

Why is HMRC Targeting Overseas Assets?

Out of the 2,388 requests made by HMRC in the Tax Year 2023/24, 638 requests were made to foreign tax authorities. This is double the number of requests the HMRC made in 2018/19. The non-dom tax regime allowed people to invest in properties outside of the UK and only pay taxes on the money they earned in the UK. However, the non-dom regime is being abolished from 6 April 2025.

tax investigation news

With the abolition of the non-dom regime, more overseas assets are now exposed to the UK taxation authority. So, these sorts of enquiries and investigations are set to become quite common.

According to experts, another factor that has prompted these strict investigations is the Pandora Papers leak. The paper included the lists of individuals who invested in offshore companies to avoid taxation. HMRC started issuing nudge letters to wealthy people named in the Pandora Papers in 2023/24.

How is HMRC Gathering Information on Tax Evasions?

HMRC receives data about these tax evasions from overseas tax authorities according to the information-gathering requirement known as the Common Reporting Standards (CRS). THE CRS was developed as a global initiative by the Organisation for Economic Co-Operation and Development (OECD) in 2014, to prevent offshore tax evasion. Approximately 120 countries have agreed to this exchange of information including countries like Bermuda, Switzerland, the Cayman Islands, and more.

The United States is not included in this agreement as it has its own policy called the Foreign Account Tax Compliance Act (FATCA). If you are an individual with foreign investments, disclosing the information to HMRC is crucial. If you fail to do so, you can be a part of a maximum penalty of 200pc of the tax due.

Conclusion

HMRC is strictly investigating the tax records of wealthy taxpayers and holiday homeowners who have invested in foreign properties or companies. The abolition of the non-dom tax regime and the Pandora papers leak are set out to be the major factors for the intensified investigation by the tax authority. 

HMRC gets information about tax evasions through CRS, an agreement for reporting tax information of individuals with different countries.

Prerana
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