Worldwide Disclosure – HMRC and Living Overseas

HMRC play the game of hide and seek using their Worldwide Disclosure Facility as overseas exercises gather pace.

Recent news stories about HMRC working with foreign tax authorities and my recent article on an Aussie couple contacting me for help having had letters out of the blue from HMRC are being confirmed on such a regular basis that our firm may have to take on extra staff.

As reported a couple of months ago our new Australian clients had left the UK 15 years ago and were amazingly asked just two months ago to pay tax, interest and penalties on a previous property disposal. The tax bill (where the interest amounted to as much as the tax) emanated from the sale of a flat in Edinburgh way back in 2003.

I have now been contacted in recent weeks by two Spanish residents and others in Eire and Cypress.

The letters are usually headed,“Your Offshore Income or Gains” and start off with a paragraph stating that:

“We have information which shows that you may have received income or gains which is taxable in the UK” and that “this information has been received from the tax information exchange with other country’s tax authorities.”

A Times story of 16 February 2019, reports that the HMRC overseas campaign is part of a wider assault on freelancers, consultants and locum nurses and doctors who are accused of using disguised remuneration schemes to pay less tax.

However my recent contact with individuals living in Europe and Australasia suggests that there may be a special unit set up within the HMRC’s risk and intelligence service.

The reason that this is slightly sinister is that usually such detailed investigation of property disposals and tracking of former UK residents now living overseas, would normally have been concentrated on high net worth individuals or people coming to the attention of HMRC via the proceeds of crime unit.

One of the recent tax problems that I have been asked to resolve was actually a foreign person who had been “employed” at Edinburgh airport’s duty free lounge where she had been promoting a brand of perfume. However when confronted with the demand for payslips and proof of employment it transpired that the company “employing” her were not deducting tax or National Insurance and were registered in the British Virgin Islands.

There are a number of questions which emanate from this discovery and these include:

  1. How did a situation arise where at a UK airport there are people working but being paid gross without deduction of tax ?
  2. As this is clearly the case why are HMRC hounding the employees and not the company owners who are getting cheap labour often being paid below the minimum wage ?
  3. Why  was this discovery not made public and have the airport bosses been asked as to how this could be allowed to happen right under their noses ?
  4. If this is taking place in the duty free section of the airport is it happening elsewhere in the airport ?
  5. If this happens at Edinburgh airport is this happening at other UK airports ?
  6. Are the authorities sure that the employment of such casual individuals is not posing a security risk to the public ?

As a matter of interest I discovered that the girl who had been pursued for tax returns and who had returned to live in Spain after working here was in fact due a rebate of tax from a former employment prior to working at Edinburgh airport.

Ricky Steedman

Ricky worked as an Investigator in the Inland Revenue for over 20 years before founding Steedman & Company in 1987, giving him the experience and knowledge that enabled him to help so many clients over the years.

His appearance on a Channel 4 television programme about the inside workings of Revenue and Customs was watched by 4.1m which sealed his status as one of the most highly respected tax consultants to ever work in Scotland.

Ricky led all tax investigation and COP 9 cases, using his extensive knowledge to help people reach a positive resolution to their situation.

Ricky passed away suddenly and unexpectedly in June 2022 after leaving his indelible mark on the company he founded and headed for over 35 years.