Overseas tax authorities have revealed the tax secrets of around 3 million UK taxpayers with offshore accounts in more than 100 countries.
Masses of information relating to 5.7 million offshore accounts has been delivered to HM Revenue & Customs under an international data swapping agreement called the Common Reporting Standard.
CRS is a network of global tax authorities in more than 100 countries working together to make sure suspected tax avoidance is quashed.
The information was delivered in the past two years and is undergoing analysis by HMRC staff busy crunching the numbers and comparing the figures with those reported on tax return filings.
The details were released by Chancellor Phillip Hammond after his recent Spring Statement.
Common Reporting Standard
The HMRC paper discloses that 1.63 million records were passed to them in 2017 under CRS.
These accounts were held by around 1.3 million people.
In 2018, more countries joined the CRS network and the number of disclosures increased to 4.4 million involving another 2.7 million people.
The information dates to January 1, 2016.
Under CRS, network members send the details of any accounts held by non-residents to the tax authority in the country where they live.
So, HMRC receives data about UK resident taxpayers with offshore accounts. Similarly, HMRC sends information about accounts held in the UK by British expats now resident in other countries.
Panama Papers tax windfall
“HMRC have begun to send letters to those it has received information on via automatic exchange of information but it seems to be that there are no other criteria being applied, so to many who have complied with their tax obligations, the letters will simply cause an additional administrative burden. For those who do have undeclared offshore income or gains however, these letters should serve as a strong prompt to seek professional advice,” said Josie Hills, a tax investigation expert at lawyers Pinsent Mason.
The HMRC paper also reveals civil and criminal investigations resulting from the Panama Papers document disclosure will yield over £190 million in unpaid tax and penalties. The papers are millions of financial documents were exposed in a leak at a legal firm in Panama representing wealthy individuals around the world.