Home Counties top UK areas for tax avoidance

Publications that covered this story include: The Times 
  • Hotspots in the UK for unpaid tax from offshore interests revealed
  • Edinburgh and Aberdeen also feature in Top 20

The Home Counties were the top UK areas for admitting underpaid tax from offshore interests last year*, our research shows.

Towns in the Home Counties, which are home to many individuals who commute into London, with high numbers of disclosures per 100,000 population include Slough (47), Watford (37), Reading (30), Guildford (29) and St Albans (28) – see table below.

The top areas for admitting underpaid tax tend to be wealthy and home to highly paid individuals who work in sectors such as financial services or IT and technology. These individuals are likely to fall into higher income tax brackets and would, therefore, be tempted to keep more of their income or assets offshore.

HMRC’s renewed focus on taxpayers’ offshore interests may have prompted more individuals to come forward over the last year. If a taxpayer comes forward then HMRC is likely to be more lenient when issuing penalties.

HMRC has been ramping up its activities targeting hidden offshore assets of UK taxpayers, with its specialist ‘Offshore, Corporate and Wealthy’ team launching over 820 investigations last year. Investigating taxpayers has become easier since some tax authorities globally started sharing data with each other under a new transparency drive.

HMRC is receiving data on offshore bank accounts belonging to UK taxpayers through the Common Reporting Standard. Switzerland, The UAE and China have all signed up.

Penalties for underpaying tax from offshore interests can be up to 200% of the amount due. The most severe penalties are issued when HMRC believes that the interest has been deliberately hidden.

Our research shows that Edinburgh and Aberdeen feature in the Top 20 areas with the highest number of disclosures, with 30 and 19 respectively.

In London there were 39 disclosures per 100,000 population last year. The UK average was 17.

Clive Gawthorpe, tax partner in our Manchester office, says: “HMRC’s crackdown on taxpayers offshore is prompting more individuals to come out of the woodwork and make a voluntary disclosure.”

“The growing resources at HMRC’s disposal means there is nowhere to hide for taxpayers with undeclared offshore interests. It therefore can make financial sense to make a disclosure as this can reduce penalties from up to 200% to less than 100%.”

“HMRC does not discriminate and will come down hard on all taxpayers with undeclared offshore interests – even if an error on a tax return arises from a genuine mistake. It is therefore important that taxpayers keep their affairs up to date.”

“Making a disclosure it almost always the best way to deal with an irregular tax position but it’s important to seek professional advice before doing so in order to get the best possible settlement.”

The lowest number of disclosures were in towns in the North of England. Oldham, Halifax, Sheffield, Liverpool and Durham saw five disclosures per 100,000 population or fewer last year.

London and the Home Counties dominate the Top Ten areas with the highest number of disclosures of unpaid tax from offshore interests last year

*HMRC, 2019; year-end March 31
**Census 2011. Not for London and national