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Expat contractors being targeting by UK taxman
| Published: | 13 Oct at 6 PM |
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British contractors living and working overseas are now under closer scrutiny by the UK’s HM Revenue and Customs department.
UK expat contractors are now under scrutiny by the British taxman following the stepping up of its requests to foreign tax authorities for information. Data obtained through a Freedom of Information request from a firm dealing with contractor payrolls and accountancy shows that over one thousand requests to overseas tax authorities for information on expat UK taxpayers were made in 2016 by HMRC. The number is twice that of requests made during the preceding year and four times more than in 2014.
The HMRC department responsible for the requests is Mutual Assistance in the Recovery of Debt, with its team in 2016 recovering close on £2 million in unpaid taxes and penalties from British taxpayers working overseas. HMRC is entitled to charge increased penalties when assets or incomes held overseas have been subject to the payment of due taxes, with penalties of up to 200 percent of the due amount of unpaid tax not uncommon.
Accountancy and tax advisory firms specialising in expat matters believe a significant proportion of British contractors working abroad are likely not to have paid the amount of tax due on their earnings. Complicated tax avoidance schemes touted as safe by their promoters and claiming HMRC approval have been found to be non-compliant with predictable results, and even expats who are not deliberately falsifying their incomes or hiding their money are being caught in the trap. It should be remembered that HMRC never endorses such schemes.
One little-known fact about HMRC’s demands for unpaid tax is that foreign tax authorities are allowed to collect unpaid taxes due from expats if instructed to do so by the British taxman. Working in full compliance with the British tax laws whilst overseas is now more important than ever. From last month, automatic information exchanges via the new Global Reporting Standard are taking place, concentrating on European countries as well as on taxpayer accounts based in over 50 jurisdictions worldwide.
UK expat contractors are now under scrutiny by the British taxman following the stepping up of its requests to foreign tax authorities for information. Data obtained through a Freedom of Information request from a firm dealing with contractor payrolls and accountancy shows that over one thousand requests to overseas tax authorities for information on expat UK taxpayers were made in 2016 by HMRC. The number is twice that of requests made during the preceding year and four times more than in 2014.
The HMRC department responsible for the requests is Mutual Assistance in the Recovery of Debt, with its team in 2016 recovering close on £2 million in unpaid taxes and penalties from British taxpayers working overseas. HMRC is entitled to charge increased penalties when assets or incomes held overseas have been subject to the payment of due taxes, with penalties of up to 200 percent of the due amount of unpaid tax not uncommon.
Accountancy and tax advisory firms specialising in expat matters believe a significant proportion of British contractors working abroad are likely not to have paid the amount of tax due on their earnings. Complicated tax avoidance schemes touted as safe by their promoters and claiming HMRC approval have been found to be non-compliant with predictable results, and even expats who are not deliberately falsifying their incomes or hiding their money are being caught in the trap. It should be remembered that HMRC never endorses such schemes.
One little-known fact about HMRC’s demands for unpaid tax is that foreign tax authorities are allowed to collect unpaid taxes due from expats if instructed to do so by the British taxman. Working in full compliance with the British tax laws whilst overseas is now more important than ever. From last month, automatic information exchanges via the new Global Reporting Standard are taking place, concentrating on European countries as well as on taxpayer accounts based in over 50 jurisdictions worldwide.
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