The process of information exchange under the Common Reporting Standard, means that HMRC now receives data from over 100 tax authorities around the world. HMRC can then cross reference this against tax returns received from individuals.
Based on the information it has received, HMRC believes that many wealthy individuals are failing to declare tax liabilities relating to the use of offshore trusts. In addition HMRC suspects that Stamp Duty Land Tax avoidance by wealthy individuals could be around £70m.
Clearly, this is an area HMRC will focus on in view of the potentially large amounts of tax at stake.
In many cases, there may not be a deliberate intention to avoid tax, the individual or the trustees may genuinely not be aware of changes in legislation. For example the new Inheritance Tax legislation introduced in 2017 are frequently misunderstood meaning that many offshore trusts do not make the correct IHT returns.
However, as frequently pointed out by HMRC and in the Courts, ignorance of the law is no excuse.
This can be a complex area, and one HMRC are very interested in, so if ETC Tax can be of any assistance, please do not hesitate to get in touch with us.
