A cache of data amounting to a whopping 400 gigabytes of information leaked by bank insiders has triggered an offshore tax evasion investigation across the United States, the UK and Australia.
Tax authorities in the the three countries are examining the leaked data, which reveals the complex offshore vehicles used to stash assets of wealthy nationals and their companies. The data includes 260 gigabytes of financial records leaked through the International Consortium of Investigative Journalists.
The journalists' stockpile spills details on shell companies and private trusts in the British Virgin Islands, the Cayman Islands, Singapore and other offshore havens. Some of these arrangements may be perfectly legal, however, as both US Internal Revenue Services (IRS) and HM Revenue & Customs (HMRC) point out.
The ICIJ said it had laid its hands on 2.5 million files that include the names of thousands of American, Australian and British citizens as well as what it describes as
... families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.
The ICIJ said it believes the 260GB it gathered is the main component of a total database of 400GB including names of organisations, their individuals owners and advisers.
“The 400 gigabytes of data is still being analysed but early results show the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands,” HM Revenue & Customs said in a statement.
“The data also exposes information that may be shared with other tax administrations as part of the global fight against tax evasion.”
Blighty's taxman said it had identified more than 100 people who "benefit from these structures and a number of those individuals had already been identified and are under investigation for offshore tax evasion". More than 200 UK accountants, lawyers and other professional advisors to these individuals also face a possible grilling by the HMRC. "No safe havens for offshore tax cheats," a statement from HMRC warns.
The ICIJ reckons the files show cash transfers, incorporation dates and links between companies and individuals that illustrate how "offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well-connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike".
The IRS notes:
There is nothing illegal about holding assets through offshore entities; however, such offshore arrangements are often used to avoid or evade tax liabilities on income represented by the principal or on the income generated by the underlying assets. In addition, advisors may be subject to civil penalties or criminal prosecution for promoting such arrangements as a means to avoid or evade tax liability or circumvent information reporting requirements.
The IRS, Australian Tax Office and HM Revenue & Customs are working together to analyse this data and have uncovered information that may be relevant to tax administrations in other countries. They plan to share the data, along with their preliminary analysis work, with tax authorities in other countries. ®