At the IMF meeting in Washington DC last week, George Osborne announced a deal between the UK, Germany, France, Italy and Spain to automatically exchange information on beneficial ownership of companies and trusts held in their countries. This follows in the wake of the Panama leaks scandal and is yet another step furthering the UK government's so-called "war on tax evasion".
Announcing the agreement, the chancellor said "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".
Although the impact of the proposed rules may not be felt immediately, the consequences of the Panama leaks are already clear – HM Revenue & Customs (HMRC) will use the data to issue wide-ranging demands for documents and information concerning companies and individuals identified in the leaks. These demands are particularly directed towards UK clearing banks, an attractive target for HMRC given the stringent customer due diligence requirements imposed by UK regulators. A combination of customer and bank account data means banks are invariably a mine of information for HMRC when pursuing tax evasion cases.
UK regulators are also understood to have contacted banks about their due diligence compliance in the wake of the leaks and sought assurances as to the strength of internal systems and controls. With London at the heart of global financial services, UK government and regulators are keen to swiftly mitigate the tainting effect of the leaks and any suggestion that Britain might be at the heart of global money laundering and tax evasion arrangements.
Don't expect the noise around these issues to diminish any time soon – with a new chief executive of HMRC taking over later this month and a recent demand from MPs that HMRC set out a clear strategy by November 2016, the war on tax evasion is likely to become more bloody.
TLT has a deep expertise and breadth of knowledge tackling HMRC enquiries and supporting clients in response to HMRC demands for information. To speak to one of our experts about these or any related matters, please contact Jake McQuitty on +44 (0)333 006 0891 or jake.mcquitty@TLTsolicitors.com or Jason Cropper on +44 (0)333 006 0814 or jason.cropper@TLTsolicitors.com
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.