British taxman following in footsteps of US counterpart
Sunday, November 23, 2003
LONDON, England: In 2002 the American Internal Revenue Service (IRS) carried out a clampdown on tax evasion through offshore accounts. Now the British Inland Revenue wants to do the same, according to a recent report in the Daily Telegraph.
The IRS said that many high net-worth individuals were depositing money into offshore accounts domiciled in Caribbean jurisdictions, and were using credit cards to pay for living expenses in the US. The IRS estimated that more than 1 million Americans were using this method of tax evasion.
The Bush administration last year signed tax information sharing agreements with the British Virgin Islands, the Bahamas, Antigua and Barbuda, and the Cayman Islands.
Holders of offshore bank accounts who have until now believed that they can use those accounts to keep their income beyond the reach of the UK Inland Revenue might soon be in for a shock.
The Revenue is carrying out its own crackdown on people evading UK income tax by using offshore bank accounts.
A spokesman for the Inland Revenue declined to confirm exactly how the crackdown will unfold, but industry insiders believe that large offshore banks will come under increasing pressure to hand over account information to the taxman.
Financial advisers are also likely to be approached for information.
Mike Warburton, tax specialist at accountants Grant Thornton, said that it is likely that the Inland Revenue will begin to work with credit card companies.
"Using a credit card on an offshore bank account has been a way of repatriating money without the Revenue knowing about it. I'm surprised that the Revenue has taken so long to sign up the credit card companies as part of the crackdown."
Banks who pass depositors' details on to the Revenue would be unable to let the person know they were doing it.
It is therefore possible to be under investigation without knowing it.
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