Taxman's new international arm to crackdown on evasion

Tax haven: Jersey

HM Revenue and Customs has restructured its international operations, in a move seen as part of a crackdown on multinational tax evasion.

A new division ­ Business International ­ was set up earlier this month and is responsible for global tax. It includes corporate and tax treaty teams that previously worked in separate units.

Judith Knott has been named director of the division. Knott was previously deputy director of HMRC’s Business Customer Unit and has also led the corporate tax team for HM Treasury.

A source familiar with the situation said that HMRC reviewed its international operations late last year and added that the rapid restructuring could signal an intention to take a harder line on multinationals in areas such as transfer pricing and offshore tax havens.

‘They’ve changed the entire structure,’ the source said. ‘Given Judith’s background is in customer service this could be HMRC pre-empting long-running litigation disputes,’ the source added.

It has also emerged that a key senior manager at HMRC, Diane Hay, the former head of its transfer pricing board, left the department last month. The board, set up early last year, has been incorporated into HMRC’s international division.

The new international division comes as the taxman turns up the heat on multinational companies.

HMRC is involved in a landmark legal dispute with drug manufacturer AstraZeneca over the taxation of transfer pricing on goods and services.

The case has been deferred until April 2010 and is likely to set a precedent for other multinational companies. AstraZeneca has set aside around $1.3bn (£890m) for claims over transfer pricing tax owed worldwide, but it is unclear how much tax HMRC alleges that the drug maker owes.

Meanwhile, the government has commissioned a review into the future of offshore tax havens. In addition, in last year’s pre-Budget report the government said it will exempt most foreign dividend payments transferred into the UK by medium and large-sized companies.

HMRC was unavailable for comment at the time of writing.