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Got an overseas account? Your days are numbered!

The writing is on the wall for anyone using overseas tax shelters to avoid paying their fair share: Her Majesty’s Revenue & Customs is coming for you.

At least, that’s what a major law firm recently said. Pinsent Masons says it’s gotten its hands on some data that details how HMRC made some 72 information requests to places such as the Cayman Islands and Jersey in 2012 alone. This is something like 26 per cent more than the taxman’s 57 requests made in 2011 – and it positively dwarfs the 32 requests HMRC made in 2010.

The law firm says that this is evidence that the taxman is ramping up its efforts to stamp out tax evasion or anyone using complicated tax avoidance schemes, and for what it’s worth I’m rather inclined to agree with that assessment. It’s a serious wake-up call for any business or individual that has been flying under the radar over the past few years, and i always used to say that the reckoning was coming for these tax cheats – it just looks like it’s just around the bend at this point!

As far as I’ve heard, HMRC is working hand-in-glove with Overseas Territories and Crown Dependencies in order to develop strategies for exposing these people and organisations and make it much harder for them to carry out what they’re doing in the future. To that end, places like the British Virgin Islands and the Isle of Man – locations that have developed a reputation for being a tax haven for corporate interests – have been under more and more pressure to fall in line. It’s not just the UK that’s pouring on the pressure, either; several countries have had it with the activity as well and are pressurising these same regions to fall into step as well.

And believe it or not, an American law is being used as the scaffolding for new British legislation in this area. HMRC’s put forward proposals for a law patterned after the Foreign Accounts Tax Compliance Act put into place by the US Congress, a piece of legislation that makes it a requirement for any overseas financial institution that has an account held by a resident of the US to provide much more detailed financial reports than it had previously – the end result could very well be that a similar rule will soon go into effect here at home, and i for one cannot wait.

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