Common reporting standard introduced in September 2017 brought first results to HMRC
HMRC is pursuing Britons contracting abroad for unpaid tax as the common reporting standard introduced in September 2017 gave access to information on expats.
HMRC is chasing down British contractors working abroad for what they believe is an incorrect amount of tax they pay.
With the help of local tax authorities who on request from their UK counterpart send the necessary information about British citizens working in their country, UK tax man collected over £6 million of unpaid tax only in 2017.
The number represents a huge increase from £800,000 collected in 2013 to around £2 million in 2016 to a record tax collection in 2017.
There have been over a thousand requests for financial information on British expats from HMRC to foreign tax authorities. On average every investigated case brought £5,664 to the budget.
The increase in tax investigations of British expats working abroad happened when HMRC received the first batch of data under the common reporting standard in September 2017. So now many expat contractors using offshore tax strategies may find they are subject to HMRC investigations.
The firm compiling the data from HMRC, Access Financial, says that penalties and interest make a significant amount of the repayment sums, of which HMRC can charge up to 200% of the amount of debt. Encouraged by the results, the UK tax authorities are intensifying co-operation with foreign tax offices, focusing mostly on high-net targets.
Many contractors get into trouble because they misunderstand their tax position in the country of their residence and back in the UK while they are working abroad. The rules to the tax residency are not that simple and straightforward, there are many nuances that can make big difference to the tax bill. It is crucial, therefore, to seek professional tax advice when establishing residency abroad.
“International tax authorities are acting in a more coordinated way, making it increasingly important that British expats receive the right advice and ensure their tax affairs are in order”.
Kevin Austin, chief executive of Access Financial
Read the original article on www.moneyinternational.com. © 2018.