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Recovering £570 billion taxable income

Crs tax information exchange - whistleblowing & risk solutions

The Common Reporting Standard (CRS) is an internationally agreed standard for the automatic exchange of financial account information between jurisdictions for tax purposes. The CRS aims to help fight tax evasion, increase tax transparency, and protect the integrity of government taxation systems.

It was agreed at the OECD in 2014 and the ‘exchange’ takes place annually. We know, therefore, that £570B is ‘hidden’ offshore by UK wealthy individuals and entities. We also know that the average holding in 2019 per individual was £486,000 – all of it in so called ‘tax havens’. The question has to be asked…

Why would a wealthy individual with UK tax domicile, place money in a tax haven if it wasn’t to hide it from the UK’s HMRC and to make their money ‘tax efficient’?

Some of the £570B will be held by ‘non-dom’ status holding individuals so that will not (currently – June 2024) be liable to UK tax. With the NHS costing nearly £200B a year and politicians claiming they are all going to ‘save’ it (it shouldn’t need saving), I can’t find a single political party that has a plan to fund it with enough resource to bring down sickness in the UK and thereby improve productivity and the UK’s economy.

And yet we have an un-tapped potential recovery fund that HMRC are apparently doing nothing to recover. Here is the information HMRC get EVERY year.

For Individuals / Controlling Persons 

  • Name, address, date of birth of Financial Account holders
  • Place of birth
  • Current country of tax residence
  • Tax Identification Number (National Insurance number in the UK)
  • Account details
  • Reporting entity where the account with us is held, such as Lloyds Bank plc, Bank of Scotland plc (including Halifax)
  • The total account balance, or value of your accounts, at the end of the calendar year or other specific period
  • The gross amount of interest, dividends and other income, such as proceeds from the sale or redemption of investments

For Entities (Businesses, Funds, Trusts etc)

  • Name and address
  • Current country of tax residence
  • Tax Identification Number
  • Account details
  • Reporting entity where the account with us is held such as Lloyds Bank plc, Bank of Scotland plc (including Halifax)
  • The account balance or value as of the end of the calendar year or other specific period
  • The gross amount of interest, dividends and other income, such as proceeds from the sale or redemption of investments
  • For some entities, we would need the information on the controlling person (please refer to Individual section)

Another question has to be asked. Why aren’t HMRC chasing this money?

Because of course it isn’t easy to find, nor segregate into neat piles of cash that can be reclaimed. But then, they don’t even ask. Here’s their response when a freedom of information request was made asking them what they’re doing about it.

“We have not produced or received any estimates, analysis or statistical information as to what proportion of the foreign financial accounts have been ‘properly disclosed’ nor can this be accurately inferred in the data we hold.”

HMRC

Basically, what this says is – ‘We have done nothing.”

HMRC also told the Financial Times…

Not all of the worlds’ jurisdictions are signed up to CRS and we could not say with certainty whether each account was ‘properly disclosed’. We would not publish a figure where we did not have certainty that it is accurate.

HMRC

And yet HMRC do produce estimates of tax avoidance in the UK, they don’t seem to worry about inaccuracies in that data? They do ‘estimates’ (which have been used in statistics for over 200 years) rather well as can be seen in their ‘tax gap‘ report.

My guess would be, to know whether the data is accurate, they need to actually investigate it. Or is that too obvious? I would say that politically, they do not want to be announcing to the general public, in times of austerity and hardship, that the wealthy are hiding £570B offshore. And they definitely don’t want that news coming out so close to an election (June 2024). Rather, my personal view is ALL politicians have fudged this.

Repeatedly.

No matter the colour of the politics, no party has griped the UK’s own tax havens with anything firmer than a feather. I worked in the Cayman Islands in compliance for three years. I know what goes on out there. I know the British tax-payer funds all sorts of programs in the islands while Cayman comfortably sits in the top four of the most expensive places to live anywhere in the world. Where you can trip and you’ll bump into a millionaire on one side of the road and someone (a local) in abject poverty on the other.

This is how my team would investigate offshore tax evasion.

We would build a neo4j database to consume the CRS data. We would consume UK tax-domiciled individuals data to compare against the CRS data.

We would set filters at statistically reliable limits to only search for volumes of offshore holdings to achieve minimum tax deficiencies, as reported on the tax-payers tax return.

We would negate any ‘non-dom’ status holders (pending the possible changes to this).

We would segregate volumes for co-mingled accounts to provide reliable data on the UK person/entities holdings.

We would collate open source data on the individuals and secure digital fingerprints to match them to device and data.

We would then cause inquiries with the sending institute to ensure the data was accurate and how that accuracy was founded (ID documents/registration documents/data accuracy). We would follow up with the individual or entity to interview the individual or controller of the revenue to uncover the reasons the money was held offshore. And we would report our findings to HMRC. Who could then threaten a criminal investigation if the missing cash isn’t paid to the exchequer. Essentially, the person made a mistake and if they pay what they owe that mistake goes away.

If HMRC can’t manage this, then give it to HX5, we accept payment on results.

I am confident we could recover enough to help the politicians really sort the NHS out – once and for all.

I have sent a link to this article to a number of politically influential individuals. If you’re reading this as a result of being sent my email, please do get in touch. I am deadly serious when I say we will investigate this for HMRC and with little investment be securing the data and evidence to recover tax from the tax havens. To learn more about me, read the articles under the founders thoughts page. It will give you a flavour of who I am. Because no matter how wealthy the person is, tax evasion is a crime and they should be dealt with for it.

Andy Parr MBA CAMS Cmgr MCMI.