The tax net is closing on expats and international workers living in the UK as HM Revenue & Customs is inundated for requests from overseas about their financial affairs.
Inquiries were up 18% to 1,852 inquiries in the last financial year – compared with 1,564 requests in the previous tax year.
Law firm Pinsent Masons argues the number of queries is directly related to the number of double taxation agreements the UK has with other nations – adding up to more than 100 treaties.
Director Phil Berwick argues that although HMRC is squeezing taxpayers for more money, other countries are also stepping up the pressure on high net worth individuals who are trying to minimise what they pay through tax management.
Wealthy have few places to hide
“The wealthy have very few places to hide to avoid tax by moving their assets around the globe. International borders are increasingly meaningless for tax authorities’ pursuit of outstanding taxes,” he said.
“As individuals move their assets to the UK, their home tax authority will take a keen interest in how those assets have been taxed.
“London attracts Ultra-High Net Worth individuals from a huge range of countries, and the expertise of London in wealth management makes it a stable ‘haven’ for individuals looking to protect their assets from political or economic instability overseas.”
The most information requests came from Norway (577), then France (225), Spain (92), and India (37).
“Norway has recently been pursuing a diverse series of international tax investigations, from carbon tax fraud to tax evasion by budget airline pilots, and has recently been locked in a dispute with Jersey over the disclosure of tax arrangements,” said Berwick.
London is France’s sixth biggest city
“The presence of France and Spain in the top five countries requesting data isn’t surprising,” said Berwick. “Faced with the prospect of tax increases, it looks like some of France and Spain’s wealthiest individuals have gratefully accepted David Cameron’s offer to ‘roll out the red carpet’ for them.”
According to French consulate estimates, London is home to around 400,000 French citizens, making London the 6th largest ‘French’ city.
Phil Berwick adds: “London’s prime property market is seen by many as a solid investment, and despite the occasional newspaper headline, the UK remains a very stable place to invest.”
Double taxation agreements aim to stop taxation of an individual’s income or assets in two countries, but they also let tax authorities find out the value of assets an individual has declared overseas.