In the year ending 31 March 2012 HMRC received 1,852 requests for information about individuals from overseas authorities under double taxation agreements, compared to 1,564 in the previous year.
Phil Berwick, a tax expert at Pinsent Masons, said: “The rise in international requests for information about taxpayers shows that tax authorities around the world are responding to pressure from their governments to maximise their tax revenues. It is not just HMRC that is piling the pressure on taxpayers.”
He said that the jump in requests shows that "there are very few places to hide" for wealthy individuals who may be trying to avoid tax by moving their assets around the globe. "International borders are increasingly meaningless for tax authorities’ pursuit of outstanding taxes," he said.
In 2011, the most requests for information (where the source is known) came from Norway (577 requests), followed by France (225), Spain (92), and India (37).
Norway has recently been pursuing a diverse series of international tax investigations, from carbon tax fraud to tax evasion by budget airline pilots, and has recently been locked in a dispute with Jersey over the disclosure of tax arrangements.
“The presence of France and Spain in the top five countries requesting data isn’t surprising," said Berwick. "Faced with the prospect of tax increases, it looks like some of France and Spain’s wealthiest individuals have gratefully accepted David Cameron’s offer to ‘roll out the red carpet’ for them.”
According to French consulate estimates, London is home to around 400,000 French citizens, making London the 6th largest ‘French’ city. Phil Berwick said: “As individuals move their assets to the UK, their home tax authority will take a keen interest in how those assets have been taxed.”
Double Taxation Agreements are designed to prevent an individual’s income or assets being taxed in two different countries. However, Double Taxation Agreements provide tax authorities with the opportunity to find out the value of assets an individual has declared overseas, which helps authorities assess the tax liability of that individual in their ‘home’ tax jurisdiction. The UK has one of the world’s largest networks of Double Taxation Agreements, with over 100 countries having signed a Double Taxation Agreements with the UK.