Hartnett gunning for tax haven advisers

Dave Hartnett, HMRC

The outgoing chairman of HM Revenue & Customs has warned it will launch criminal prosecutions against accountants who have stashed clients’ money in offshore tax havens to duck paying UK taxes.

HMRC has given British investors in tax havens such as Liechtenstein a chance to come clean in exchange for reduced penalties. But it is now poised to turn up the heat on wealthy tax dodgers and their accountants.

In an interview with Accountancy Age, acting HMRC chairman Dave Hartnett said it was determined to crack down on a minority of repeat offenders in the profession who advise clients on using tax havens illegally.

He said that HMRC was building a detailed picture of rogue accountants as part of an investigation into rich investors who have hidden money in Europe and the Channel Islands.

If HMRC finds an accountant is involved in illegal offshore tax activities it will consider investigating all the clients of the accountant in an effort to reduce lost tax revenue.

Last year HMRC raised £400m after British taxpayers with money in offshore accounts run by high street banks were offered leniency in return for voluntary disclosure.

‘We are constantly building up intelligence on firms that help their clients into any sort of [illegal] offshore arrangement,’ Hartnett told Accountancy Age. ‘Every individual we investigate in relation to Lichtenstein we will ask how [their money] found its way to Liechtenstein and we may pursue that enquiry quite vigorously until we understand it.

‘If we find a dishonest accountant we will automatically prosecute and the tax world knows this.’

HMRC is using powerful software to compile evidence of accountants linked to offshore tax evasion. This could pave the way for prosecutions of accountants if they are shown to be complicit in a client’s offshore affairs, which is classed as fraud.

‘We have got more successful at rooting out tax advisers who are maybe not as honest
as they should be,’ Hartnett said.

'Because we are identifying more people with offshore accounts we are better informed today than we have ever been before about how they have found their way into the offshore environment.’

He said that HMRC hoped to start its first prosecution of an investor over offshore evasion within months. He added that the 300 British investors with Lichtenstein-based bank accounts ranged from professional investors and writers and featured some ‘household names’.

Tax experts broadly welcomed Hartnett’s comments. Bill Dodwell, tax partner at Deloitte, said: ‘I’m absolutely certain that the accounting profession and all our regulators are completely united on this. Nobody wants to encourage criminal activity.’

He said the ‘vast majority’ of private investors using offshore accounts illegally probably do so without seeking advice from accountants. ‘If you are stashing money offshore would you want a third party involved?’

John Whiting, chairman of management of taxes committee at the Chartered Institute of Taxation, said accountants welcomed the HMRC’s distinction between illegal tax evasion and legal tax planning and avoidance.