LONDON: A crack team of experts is being recruited to hunt down property developers dodging tax using offshore companies, the Standard can reveal.
The new task force will investigate tax avoidance and evasion with a particular focus on the London property market.
Ministers said officials who have started the team’s work have already started identifying the first firms for investigation.
Financial Secretary to the Treasury David Gauke said: “It’s good for the whole country that London property attracts so much international investment but we are clear that overseas developers must pay their fair share of tax.
This task force will root out those who try to profit from London property without paying UK tax.”
George Osborne’s Budget set out new measures to ensure profits from the development of UK property are always subject to UK tax.
In particular he signalled a clamp down on developers who are essentially UK based, but for tax purposes have their HQs overseas, allowing them to shift profits abroad to avoid tax.
Typically firms pursuing such arrangements base overseas offices in Jersey, Guernsey and the Isle of Man. The new task force’s preliminary research has already identified about 100 completed and ongoing projects where tax planning may be being used to shift profits offshore.
The team will also seek to ensure that firms comply with new rules from now on, paying the right amount of employment taxes, stamp duty and other levies.
Mr Osborne has led international action at the G20 against tax avoidance and introduced the diverted profits tax to threaten online firms paying inflated royalties to owners in tax havens.
Many London property developers are legally owned by businesses based in offshore tax havens.
The Government is under pressure on taxation from Labour which claimed the Chancellor offered “mate’s rates” to Google when the firm paid just £130 million for 10 years’ worth of corporation tax.
Earlier this year millions of files from the database of one of the world’s biggest offshore law firms, Mossack Fonseca were leaked.
The so-called Panama Papers revealed ways in which rich individuals and firms can exploit secretive offshore tax regimes to avoid taxes, thrusting the issue into the spotlight.
