HMRC Tips from Foreign Tax Authorities Surge by 48%

Data from foreign tax authorities about UK taxpayers living abroad has surged by 48% over the last five years, according to a recent report.

In 2019, HMRC received 6.4 million disclosures from foreign tax authorities regarding UK taxpayers. This number has increased annually, with 7.4 million disclosures in 2020, 9.2 million in 2021, and 9.5 million in 2022.

Increased Participation in the Common Reporting Standard (CRS)

Foreign tax authorities from over a hundred countries send data to HMRC through the common reporting standard (CRS), part of the global OECD tax framework. Currently, 121 countries participate in the CRS, including former offshore tax havens like Switzerland, Bermuda, the British Virgin Islands, and the Cayman Islands.

Experts stated that HMRC is now receiving unprecedented amounts of overseas data to support its ability to identify UK residents who may not have paid all the taxes that they should. The increase in disclosures since 2021 can partly be attributed to the expansion of the common reporting standard to the majority of the world’s major economies. Many of those jurisdictions are also smoothing out their reporting systems and are, therefore, improving their rate of compliance with the standard.

Options for Disclosing Untaxed Offshore Funds

Individuals needing to disclose untaxed offshore funds can do so through HMRC’s digital disclosure service (DDS) or its contractual disclosure facility (CDF), which can reduce penalties if HMRC discovers the assets. HMRC can impose "super penalties" of up to 200% if investigators find undeclared assets.

It was also stated that any individuals with undeclared offshore assets should be paying attention to the increasing sophistication of the CRS and the increasing likelihood that HMRC will find out about those assets.

Continue reading more about the latest Property-tax-related news and blogs on our website.