UK Revenue’s pursuit of tax evaders reaps rewards.jpg

UK Revenue’s pursuit of tax evaders reaps rewards

By BILL BLEVINS [email protected]

Bill Blevins is the Managing Director of Blevins Franks. He has specialised in expatriate investment and tax planning for over 35 years. He has written books and gives lectures on this subject in Southern Europe and the UK.

The UK tax authority has been hard at work targeting tax evasion over the last few years.

Many readers will be aware of the drive to recoup unpaid tax revenue, particularly from assets held in offshore bank accounts.

Some may think it doesn’t affect them while others may feel that they have ‘got away with it’.

Beware – the government and HM Revenue & Customs (HMRC) are determined to use every method they can think of to get their hands on tax they argue is rightfully theirs.

One of the main methods of claiming unpaid tax is through so-called tax “amnesties” – disclosure facilities to encourage tax evaders to come clean, pay their back tax, interest and penalties and then to be tax compliant in the future.

In 2007 HMRC announced its Offshore Disclosure Facility (ODF), which raised nearly 450 million Pounds Sterling from around 45,000 people with undeclared assets in offshore accounts.

Last year the New Disclosure Opportunity (NDO) was launched and ran until the beginning of January this year.

HMRC has now revealed that the NDO has yielded around 82 million Pounds from approximately 5,500 disclosures – but this is just from people who came forward voluntary and approximately 10,000 registered.

HMRC will now dig deeper into information held to pursue those who did not disclose although they have undeclared offshore assets and expects to raise around 500 million Pounds in unpaid tax, interest and penalties from the NDO overall.

Before the start of the NDO, 308 UK banks with overseas branches and foreign banks with UK account holders were ordered to supply HMRC with information on offshore accounts.

Once the NDO closed, tax inspectors planned to examine the information supplied and pursue those with offshore bank accounts and undeclared tax liabilities who did not make a disclosure.

The Liechtenstein Disclosure facility (LDF) is running from September 2009 to March 2015.  As of March 31 this year, 419 taxpayers had registered for the LDF – but as there is a five year window for disclosure, HMRC is not concerned about what critics describe as a low response citing lack of publicity as the main reason.

Following the release of the March figures, HMRC has said that the numbers stepping forward have increased significantly.

“We are very pleased with the way the LDF is going and money from previously untaxed accounts is already coming in. We’re only 50 yards into a marathon. Those who don’t come forward will face naming and shaming and in the most extreme cases will be prosecuted.  We always win in the end.”

From September, new key legislation in Liechtenstein in conjunction with HMRC means that Liechtenstein bank accounts will undergo a compulsory tax audit.

All UK taxpayers suspected of owing tax will have to make a declaration under the LDF or find their accounts closed.

HMRC is hoping to claim around one billion Pounds from around 5,000 Liechtenstein account holders.


A tax amnesty for medical professionals who failed to declare income for tax ran from January to June.

Called the Tax Health Plan, it has yielded around nine million Pounds from approximately 1,500 disclosures, with one case alone worth 1.2 million.

HMRC said it is “encouraged” by the results and that “the campaign has resulted in millions of pounds of tax that might otherwise have been lost being paid to HMRC as required by law.”

HMRC said that it had more than 20 projects aimed at particular groups.

There are many various ways in which HMRC is obtaining information on and pursuing suspected tax evaders.

On August 10 HMRC sent out letters to 600 offshore account holders who used the 2007 ODF to question them about how offshore accounts are marketed.

It asked those involved to take part in a phone call with a tax official by answering “a few short questions about how you opened, operated and maintained your accounts”.

HMRC maintains that it wants to better understand how these accounts are marketed to UK citizens and stresses that “This is not an enquiry into your tax affairs”.

However, the letter is being viewed by many as a forerunner to a major probe into offshore tax avoidance structures. Tax lawyers are advising people to be wary of what they say to HMRC, concerned that the phone calls are “fishing trips” to question wealthy taxpayers about their financial affairs.

However hard tax evaders try to hide their money, the taxman will catch up.  It was reported in July 2010 that a businessman had buried 140,000 Pounds in his aunt’s grave intending to leave it hidden for 20 years, the period that tax investigations can go back.  But a whistleblower tipped off tax inspectors who, with permission from the priest, reclaimed the 50,000 Pounds due to them.

HMRC disclosed in April that it has paid informers 437,000 Pounds in return for tip-offs since 2007 and that it prosecutes around 200 people annually for tax evasion.

Nobody really wants to be continually looking over their shoulder to see how close the taxman is.

Fortunately, there are legitimate tax mitigating structures available in both Portugal and the UK to help the wealthy reduce their tax liabilities to the minimum possible.

An international tax and wealth management specialist like Blevins Franks will advise on which is most suitable for you, taking into consideration your personal circumstances, objectives and country of residence.

To keep in touch with the latest developments in the offshore world, check out the latest news on the Blevins Franks website by clicking the link on the right of this page.