The cache of files will include bank and investment accounts, certain insurance policies, hedge funds, private equity funds and offshore trusts.
This data flow starts a year before even more information starts to come into HMRC from around the world when the Common Reporting Standard (CRS) comes into force on 30 September 2018.
In April, just weeks after Panama Papers leak, where more than 11 million files from Panamanian law firm Mossack Fonseca exposed how the rich and powerful around the world use offshore shell companies to avoid paying tax, the-then British prime minister David Cameron revealed that all of the crown dependencies and British overseas territories had formally agreed to disclose information relating to the beneficial ownership of companies.
Non-dom exemptions
However, information related to UK non-doms – those living in Britain but domiciled overseas – will initially be strictly limited, the Financial Times reported on Friday.
“I suspect the real information about people who deliberately trying to hide their tax affairs from HMRC will come when the third wave of information comes through."
This is likely due to their special tax status which allows UK non-domiciles to only pay tax on their UK income so that if they have investments or offshore bank accounts, they can legally leave these undeclared, and pay no UK tax on the balance, explains Tessa Lorimer, special counsel at international law firm Withers.
“I suspect most of them [UK non-doms] will be taxed on a remittance basis which is an alternative form of tax treatment for individuals who have who offshore income and gains from other countries,” she told International Adviser.
Criminal investigations
The UK tax office now hopes to raise up to £340m ($442m, €394m) from this latest data sharing agreement, including from overseas territories such as Bermuda, the British Virgin Islands, the Cayman Islands and Gibraltar.
