HM Revenue and Customs (HMRC), working with the United States and Australian tax administrations (the IRS and ATO) is looking into tax evasion using offshore structures. It has some 400 gigabytes of data which reveals extensive use of complex offshore structures to conceal assets by wealthy individuals and companies.

HMRC says that early results show the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands, and the Cook Islands. It has identified around 100 people who benefit from these structures and a number of those individuals had already been identified and are under investigation for offshore tax evasion. They have also identified more than 200 UK accountants, lawyers and other professional advisors who advise on setting up these structures who will also be scrutinised. UK residents using offshore structures should review their taxation arrangements, and seek advice if necessary, to ensure they are compliant with UK tax law. HMRC encourages voluntary compliance and early disclosure of tax irregularities. Failure to do so may result in a criminal prosecution or significant financial penalties and the possibility of their identity being published.

Editorial comment

The use of an offshore structure is not illegal, however concealing income or gains by diverting it away from the taxpayer by using an offshore structure will not be effective for tax if the set up is a sham.

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