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Lexis+ AI
Jean-Yves Gilg

Editor, Solicitors Journal

Surge in HMRC investigations to follow beneficial ownership plans

Surge in HMRC investigations to follow beneficial ownership plans


Major EU economies promise to automatically share information on taxpayers

An increase in information exchange between different jurisdictions will result in a surge of civil and criminal investigations by tax authorities, according to a City lawyer.

The EU's five largest economies revealed plans last week to share information on the beneficial ownership of companies and trusts held in their countries.

The UK, Germany, France, Italy, and Spain have agreed to automatically exchange information on beneficial ownership in the wake of the explosive Panama Papers leak.

Announcing the move at the spring meetings of the International Monetary Fund in Washington DC last week, the chancellor, George Osborne, said the rules were 'a hammer blow against those that would illegally evade taxes and hide their wealth in the dark corners of the financial system'.

'Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money, and benefiting from corruption,' he continued.

'Strong words of condemnation are not enough, populist outrage doesn't by itself collect a single extra pound or dollar in tax or put a single criminal in jail. What we need is international action now, and that's precisely what we are doing today with real concrete action in the war against tax evasion.'

Speaking on BBC Radio 5 Live's 'Wake Up to Money' programme, Heather Self, a partner at Pinsent Masons, said the new rules were a 'significant step in what has been an increasingly accelerated trend' of transparency.

Commenting on the announcement, Adam Craggs, a partner and head of tax disputes at City firm RPC, said that the increased exchange of information would be likely to lead to a surge in both civil and criminal investigations carried out by HMRC and other tax authorities.

'The Revenue has been targeting those who attempt to conceal income and assets through the use of trusts and companies based outside the UK for some time - but the information-gathering process has not always gone as well as HMRC would have liked,' he said.

'This move to an automatic exchange of information relating to ownership will be seen by HMRC as a positive move and a real breakthrough in their on-going campaign to "crack-down" on tax avoidance.'

Craggs added that the automatic exchange of information would be likely to put pressure on other jurisdictions to make information on ultimate beneficial ownership of companies and trusts more readily available.

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