Tories aim to raise extra £5bn a year in tax avoidance clampdown

The Conservatives are set to press on with efforts to counter tax avoidance and evasion, with measures on the way including the exchange of information with foreign tax authorities.

All the major parties pledged in the election campaign to raise billions more each year from individuals not paying their "fair share". But despite Labour's higher counter-avoidance targets, it is Tory-led governments that have had more recent success in tackling the issue, said George Bull, senior tax partner at accountants Baker Tilly.

"Major strides were taken [during the last parliament] with accelerated payment notices, naming and shaming, and in effectively closing down the tax avoidance industry."

As part of the coalition's clampdown on tax avoidance since 2010, HM Revenue & Customs was given powers, including the right to issue payment demands for unpaid tax associated with arrangements that it disputes.

Using accelerated payment notices, the Revenue expects to reclaim roughly £8bn from taxpayers who it argues deliberately avoided tax.

Combined with reforms that are on the way, not least the automatic exchange of information from overseas tax authorities which starts in 2017, the Conservatives aim to raise an extra £5bn a year by the end of the parliament.

Facilities allowing UK tax residents with undisclosed overseas assets to become compliant while paying only limited penalties will soon close.

The Conservative-led coalition announced in the March Budget that the deadline for signing up to the Liechtenstein Disclosure Facility, used by many Swiss account holders, would be brought forward from next April to the end of 2015.

"I do not believe the full benefit of these measures to the exchequer has yet been felt . . . I expect more receipts to flow in the new parliament," Mr Bull said.

Although many wealthy foreign residents will breathe a sigh of relief at the defeat of Labour, which pledged to abolish the regime that allows non-domiciled residents to exempt offshore earnings from UK tax, their privileged status may not be exempt from changes, said Chris Groves, a partner at law firm Withers.

"It is likely that even a Conservative majority government would look to restrict the regime for longer term residents," he said.

Annual charges levied on non-doms living in the UK on the so-called "remittance basis" have risen under the coalition to a maximum of £90,000 a year.

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The Revenue has been increasing its compliance efforts, with the number of tax investigations into non-resident and non-dom individuals rising three-quarters between 2012-13 and 2014-15, according to official figures obtained by law firm RPC.

Adam Craggs, head of tax disputes at the firm, said the Revenue's clampdown on those it believes are avoiding UK tax liabilities is likely to intensify.

"HMRC's scrutiny of wealthy individuals' residency arrangements is intensifying, as that segment of internationally mobile high earners is increasingly viewed as a rich seam for tax enquiries," Mr Craggs said.

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