Trust Bloomberg Tax for the international news and analysis to navigate the complex tax treaty networks and global business regulations.
By Ben Stupples
The U.K.’s tax agency has been given a seven-week deadline from a parliamentary committee to obtain and report on the impact of the Paradise Papers.
Her Majesty’s Revenue and Customs should obtain the Paradise Papers and “set out its response” to the data leak by March 2018, according to a Jan. 12 report from the Public Accounts Committee, which scrutinizes public spending, on the tax agency’s annual performance. HMRC’s report to the select committee on its response should include any information on “any additional revenue likely to be at stake,” it added.
Published Nov. 5, the Paradise Papers data leak revealed the offshore tax planning of rich individuals and multinational companies, including Apple Inc. The data included 6.8 million files from Bermuda-based law firm Appleby. Nearly 14,500 of Appleby’s clients cited in the leak are linked to the U.K., the second-highest number of country connections in the Paradise Papers after the U.S.
In its report, the Public Accounts Committee (PAC) raised concern over HMRC’s future performance as the tax authority juggles its 10-year modernization program with major operational changes raised from the U.K. leaving the European Union. In a Jan. 12 news release, committee chair Meg Hillier warned that the Paradise Papers may also “significantly increase” HMRC’s workload.
In a statement, a spokesman for HMRC told Bloomberg Tax the authority continues “to look very closely at the information disclosed in the public domain” on the Paradise Papers. This information could reveal new facts “that could add to existing leads and investigations,” he said.
Since November 2017, the International Consortium of Investigative Journalists has published selected data on the Paradise Papers. The Washington D.C.-based network has a policy, though, against working with governments. As a result, the PAC noted in its Jan. 12 report that HMRC will likely have to use information-exchange agreements with other countries to get the data.
HMRC’s chief executive, Jon Thompson, told the PAC in a Nov. 6 evidence session with the PAC that the tax authority asked the ICIJ to see the Paradise Papers “two weeks” before. He also told the committee that HMRC eventually had to purchase the Panama Papers, an April 2016 data leak of more than 11 million documents from Panamanian law firm Mossack Fonseca & Co.
Fiona Fernie, a London-based tax partner at global law firm Blick Rothenberg, told Bloomberg Tax that HMRC sent letters to U.K. taxpayers linked to the Panama Papers after it obtained the data.
“In the letters, HMRC asked: ‘Can you show us where this income is on your tax return?’ If not, please explain why,” she said. “That’s a sensible approach as they can send the letters in batches, and I suspect HMRC will take a similar one with the Paradise Papers if they get the data.”
In its report, the PAC noted that HMRC has secured an additional 100 million pounds ($135 million) and opened 66 investigations from the Panama Papers. HMRC’s latest annual report, by contrast, shows that it collected 28.9 billion pounds in the last financial year by tackling non-compliance.
Amit Puri, U.K. tax investigations director at global accounting firm Grant Thornton, told Bloomberg Tax that HMRC will aim to target “middle men” in its investigations around the Paradise Papers.
“They see these individuals as the enablers and facilitators of tax evasion,” he said. “Once you break the middle players who act for lots of other people, the amount of tax collected starts to rise.”
To contact the reporter on this story: Ben Stupples in London at email@example.com
To contact the editor responsible for this story: Penny Sukhraj at firstname.lastname@example.org
Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)