The number of UK businesses using tax havens has halved as HMRC gains better access to data. Research by Pinsent Masons shows the number of companies registered in key tax havens without meeting ‘substantial activity’ requirements has dropped from 512 to 294.
HMRC’s crackdown targets UK businesses operating in jurisdictions with favourable tax rates but limited local presence. Using data-sharing agreements with nearly a dozen popular destinations, tax authorities now flag British companies failing to demonstrate genuine operations. This allows HMRC to investigate potential tax avoidance or evasion.
The jurisdictions involved include Anguilla, The Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, and Turks and Caicos Islands. These territories share information under the OECD’s ‘No or Only Nominal Tax Jurisdiction’ programme.
This initiative aims to combat tax avoidance by introducing minimum standards for businesses in low-tax countries. Companies must now prove they conduct sufficient activity locally to avoid being labelled tax dodgers. The project also promotes minimum corporate tax rates to discourage the use of tax havens.
By tightening rules and sharing information globally, HMRC is closing loopholes that previously allowed UK businesses to avoid tax. This effort reflects growing international cooperation to ensure companies meet their tax obligations, reducing the misuse of offshore structures.
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