HMRC Shows No Mercy In Hunt For Offshore Money

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The tax man is still hunting down taxpayers suspected of hiding their wealth offshore despite suspending most other investigations.

HM Revenue & Customs has put thousands of onshore inquiries on the back burner for the duration of the coronavirus crisis or extended deadlines to many for handing over financial information.

But no mercy is being shown to taxpayers with offshore assets, income or gains.

HMRC has confirmed no flexibility is available for them to meet deadlines to produce details about their holdings.

Unfair treatment

“It seems extraordinary that, at a time when other taxpayers are being offered the chance to temporarily suspend enquiries or delay responses to HMRC’s questions, those with offshore assets are still being put under pressure and are expected to request further time to produce information if they are struggling,” said Fiona Fernie, a tax partner at advice firm Blick Rothenberg, who was one of the first to reveal the HMRC policy.

“Not only is it likely that the current circumstances will make it more difficult for taxpayers to obtain the relevant details to answer HMRC’s questions, many taxpayers will find the need to ask for an extension of time a very stressful process, when they already have more than enough anxiety to deal with.”

Fernie argues that the time and money HMRC spends on investigating taxpayers with offshore holdings could provide better results if directed elsewhere.

HMRC resources could be better deployed

“It also seems somewhat strange that HMRC are pursuing these lines of enquiry, which in our experience often result in taxpayers demonstrating to HMRC that their UK tax affairs are fully compliant, rather than dedicating available resources to completing longstanding open enquiries, particularly in cases where they already been provided with a significant amount of information,” she said.

“HMRC should be sensitive to the difficulties which many taxpayers are experiencing during the current pandemic, but in the majority of cases already under enquiry it would be beneficial for both the taxpayers and HMRC to progress the enquiries to a conclusion.

“Although not all of those enquiries will yield any significant amount of tax, I question whether these ‘offshore’ letters will produce enough tax to be worth HMRC dedicating resources to this initiative rather than to the normal enquiry process.”

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