HMRC's double taxation requests fall 40%

THE NUMBER of double taxation requests made by HM Revenue & Customs dropped around 40% in 2011/12.

The Revenue made 640 requests for information under double taxation agreements with other countries in the year to 31 March 2012, compared with 857 the year before, according to information collected by law firm Pinsent Masons.

However, HMRC cast its net further in 2012, signing agreements with Barbados, Liberia, Brazil and Grenada, among others.

The countries most frequently approached for information in 2011 were: Australia, with 96 requests; Spain, with 49 requests; and Ireland, with 38 requests.

Pinsent Masons partner Phil Berwick said the figures may suggest the Revenue’s efforts against evasion and avoidance have been effective, but did not rule out the detrimental effect of staffing cuts.

He said: “HMRC has begun investigations into thousands of individuals with overseas assets in the last few years, and will probably have picked off most of the low-hanging fruit.

“It may be the case that HMRC’s heavy workload is catching up with it,” he added.

“The recent National Audit Office report on HMRC’s compliance performance revealed that HMRC had 41,000 open avoidance investigations. HMRC has pushed very hard on compliance recently and may be hitting capacity”.

According to Berwick, the decline in requests could be a sign that more tax dodgers are coming forward.

He said: “HMRC will come down very heavily on those it suspects are hiding assets. It is far better to get on the front foot and tell HMRC about an undisclosed offshore asset or other problem before HMRC finds out and begins an investigation.

“Taking a pro-active approach and using facilities such as the Liechtenstein Disclosure Facility to declare any offshore assets could help limit the risk of a criminal prosecution.”