Ukraine suddenly 40% more interested in UK tax info – HMRC

Growing trend of chasing 'high net worth foreign nationals'?


Cooperation between HM Revenue and Customs (HMRC) and foreign tax authorities will only increase as more countries sign up to automatic tax information exchange agreements.

This is according to Pinsent Masons, the law firm behind Out-Law.com, which obtained figures showing a 45 per cent increase in the number of requests for information made by overseas governments as part of their own tax evasion investigations in 2013.

According to HMRC, 2,466 requests were made in 2013 compared to 1,701 in 2012, with the largest number of requests coming from Norway and France. The biggest percentage increase in requests came from Ukraine.

Tax expert James Bullock of Pinsent Masons said that the UK tended to receive a large number of requests for this kind of information due to the number of wealthy individuals and business people from overseas living and investing in the UK.

"The UK, particularly London, attracts many high net worth foreign nationals that come here to live or invest," he said. "Some will use the UK as a stable safe haven for their wealth, while others simply see the economy as attractive."

"Inevitably, nearly all of them will have relatively complex tax affairs, and with the cross-border exchange of tax information increasing, their chances of coming under the spotlight of their home countries' tax authorities are growing. Even countries that do not have a desperate need to shore up their public finances are stepping up their fight against tax evasion, because it makes sense to use the new ways to obtain information that are becoming available to them," he said. Last October, 51 countries formally agreed to adopt a Common Reporting Standard (CRS) for automatic exchange of financial account information in tax matters, created by the Organisation for Economic Cooperation and Development (OECD). From 2017, 'early adopters' of the CRS will begin automatically exchanging information with each other in respect of data collected from 31 December 2015.

HMRC received 690 requests for information from Norway in 2013, up from 541 in 2012. According to Pinsent Masons, Norway introduced a 'tax amnesty' in 2010 as part of its own tax transparency initiatives, which allows those coming forward voluntarily to pay just taxes and interest due rather than the normal 60% penalty. It also reported smaller increases in requests from France, which made 232 requests; Poland, which made 149 requests; and Spain, which made 101 requests.

The number of requests made by Ukraine in 2013 increased by 40 per cent to 88, accounting for the biggest percentage increase in requests by an individual country. Yuri Botiuk of Pinsent Masons said that this was likely associated with the political and economic difficulties in the country, but that interest from the Ukrainian authorities was likely to continue as part of the country's new anti-corruption laws.

"The new government is likely to use tax information sharing agreements to assist in its anti-corruption drive," he said. "A lot of the information they receive will be about perfectly legitimately acquired assets, but it will also be valuable in helping them to identify any individuals who may have acquired wealth, placed it overseas and be under-declaring it for tax purposes."

Copyright © 2015, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.


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