Tackling offshore tax non-compliance

The measure

The government recognises that challenges to offshore tax compliance remain as a result of the complexity of offshore arrangements and the difficulties in obtaining information held in other jurisdictions.  HMRC published experimental statistics on 24 October 2024 which estimated that offshore non-compliance where there is Automatic Exchange of Information (AEOI) costs around £0.3bn. This however does not cover any non-compliance which relates to jurisdictions where there are no AEOI agreements.  

The government has announced that it will take further steps to tackle offshore non-compliance by increasing the amount of offshore data available to HMRC, ensuring that tax is paid on AEOI income, and providing additional resources to allow HMRC to tackle more complex offshore cases.    

Whilst HMRC have already commenced work in this area, the budget announcements include: 

• Extending reporting to UK crypto-asset users under the Crypto-asset Reporting Framework (CARF), which the UK has committed to implementing for the collection of information from 2026 and its exchange from 2027; 

• Changes to the penalty regime for failure to report Common Reporting Standard (CRS) data, to ensure reporting institutions are meeting their obligations; 

• Publishing a consultation document to tackle challenges arising from the mismatch of information on offshore interest being provided on a calendar year basis rather than a UK tax year basis. 

In addition to the above, with respect to domestic action, the UK will continue to work with other jurisdictions to extend global transparency and address remaining tax gaps.    

Who will be affected?

Individuals and structures comprising of corporates and trusts with an offshore connection that are subject to UK tax.

When will the measure come into effect?

This measure will take immediate effect. The consultation on simplifying the taxation of offshore interest was released on today (closing 22 January 2025 for comments).