Inward and outward information requests between the UK revenue (HMRC) and foreign tax authorities for information on UK taxpayers were at their highest level in at least seven years in 2023/24, according to data obtained by accountants Price Bailey under the Freedom of Information Act.
The data released revealed that 2,388 requests for information were made or received by HMRC regarding taxpayers with assets in the UK and overseas in 2023/24. HMRC made 632 outbound requests in 2023/24, which was fewer than the 777 requests in 2022/23, but almost double the 331 requests made in 2018/19, immediately before the pandemic.
Price Bailey said the volume of information exchanged was likely to rise this year following the announcement in the Spring Budget that non-UK assets will be subject to inheritance tax, capital gains tax and income tax based on residence rather than domicile from 6 April 2025.
HMRC also issued 23,500 'nudge letters' in relation to offshore matters in 2023/24, a slight decline on 2022/23 when 23,936 were issued. However, the monetary value of disclosures resulting from these letters almost trebled between 2022/23 and 2023/24 from £19.6 million to £57.2 million.
"We have been seeing increased HMRC scrutiny of wealthy people with overseas assets," said Price Bailey tax investigations partner Andrew Park. "This is likely to intensify following the abolition of the non-dom tax regime, which will bring more offshore assets within the UK tax net.
"HMRC will be relying heavily on requests to foreign tax authorities to build a picture of the increased tax liabilities of wealthy UK residents. It is likely that some UK residents who currently take advantage of non-dom status will fail to disclose their full liabilities to HMRC."
However Sovereign (UK) Managing Director Simon Denton is also seeing increasing numbers of UK resident HNWIs, both UK domiciled and non-domiciled, who are now making plans to depart from the UK and become non-UK resident before the start of the next UK tax year.
"HNWIs are generally highly mobile. In the face of increased reporting, compliance costs and the prospect of much heavier UK tax exposure, many current UK residents are looking to establish an alternative residence elsewhere," said Denton.
"Greece, Italy, Cyprus, Monaco and Ireland are among the most attractive tax and residency regimes in Europe, but Sovereign's specialist Residency and Citizenship Services Division can provide assistance with 15 residency programmes worldwide. So, there are plenty of options for UK residents to choose from," he added.
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