It was reported on 31 May 2022 that UK residents had GBP 850 billion in financial accounts overseas in 2019 (the latest year for which statistics are available) of which GBP 570 billion was based in tax havens. This data was disclosed by HMRC in response to a freedom of information request. The information was taken from financial data exchanged with HMRC by the tax administrations of more than 100 countries in the period since 2017 under the Common Reporting Standard (CRS).

Under the CRS, jurisdictions obtain information from financial institutions and then exchange that information automatically with other jurisdictions each year. The CRS outlines the financial account information to be exchanged, defines the financial institutions that must submit a report, establishes the different types of accounts and taxpayers that are covered by the requirements, and lays down common due diligence procedures that must be followed by financial institutions.

HMRC is not able to estimate the proportion of UK residents that correctly report their foreign financial assets, clarifying that this information cannot be accurately calculated from the information they hold. The income in some of the foreign financial accounts on which information has been received would not in any case be taxable in the UK.

It has been noted that the financial assets held offshore amount to around 6% of the total net household wealth in the UK, which has been estimated at GBP 14.6 trillion.

HMRC compares the data received under the CRS to its UK tax records and other information and takes appropriate enforcement action where necessary. Where discrepancies in the data are found, HMRC may send nudge letters advising taxpayers to check their tax reporting. Nudge letters prompt taxpayers to review their tax returns and their finances generally to check for any further income or gains that should be reported to HMRC.

In some cases, as a result of information received under the CRS, criminal investigations are launched. The information from the CRS is therefore important in helping HMRC to check tax compliance and combat tax evasion and avoidance.

HMRC notes that it has collected an additional GBP 570 million in tax since 2017/18 as a result of agreements for the automatic exchange of tax information, including the CRS. However, the CRS does not necessarily reveal all the offshore financial assets of UK taxpayers, as not all jurisdictions have implemented the agreement and it is not possible to check that every financial account was correctly disclosed.

HMRC notes that some of the foreign bank accounts included in the reporting may relate to non-domiciled persons, and the income would not be subject to tax unless remitted to the UK. It is not however possible for HMRC to estimate how many of the 1.2 million accounts in tax havens in 2019 were the bank accounts of non-domiciled people. The non-domiciled tax regime in the UK has recently come under close scrutiny, with some calls for further reform of the regime.