Episode Details

🎙️ PODCAST SHOWNOTES

Can HMRC Obtain Information from a Svalbard Trustee?

When an offshore trust has a trustee resident in Svalbard, an important enforcement question arises:

How can HMRC obtain information about the trust if it opens a UK tax investigation?

The answer requires separating two different mechanisms:

1. HMRC's domestic information-gathering powers

and

2. International exchange-of-information arrangements.

The fact that a trustee is outside the United Kingdom does not necessarily make information inaccessible. But HMRC's ability to compel production directly from a foreign person can be materially different from its powers over UK persons.

⚖️ 1️⃣ HMRC's Schedule 36 Powers

Schedule 36 to the Finance Act 2008 gives HMRC extensive powers to obtain information and documents reasonably required for checking a taxpayer's tax position.

Depending on the circumstances, HMRC may seek information from:

• The taxpayer

• UK professional advisers

• Banks and financial institutions

• Corporate service providers

• Other third parties holding relevant information

Accordingly, an offshore structure does not prevent HMRC from investigating information already held within the United Kingdom.

🏢 2️⃣ The Offshore Company

Consider the structure:

UK PROPERTY

↓

OFFSHORE COMPANY

↓

OFFSHORE TRUST

↓

SVALBARD-RESIDENT TRUSTEE

HMRC may potentially obtain information about the offshore company from UK persons or institutions that possess relevant records.

This could include, depending on the facts:

• UK solicitors

• Accountants

• Property managers

• Banks

• Corporate agents

• Other relevant third parties

The existence of an offshore company therefore does not place all information concerning the structure beyond HMRC's reach.

🌍 3️⃣ Direct Enforcement Against a Foreign Entity Is Different

A separate question is whether HMRC can serve and effectively enforce an information notice directly against an offshore company or trustee with no UK presence.

Cross-border enforcement is more complicated than exercising information powers against a UK-resident person.

Questions can arise concerning:

• The statutory scope of the particular information power

• Territorial application

• The foreign person's UK connections

• Available enforcement mechanisms

• Applicable international assistance arrangements

For that reason, the legal ability to issue a notice should be distinguished from the practical ability to enforce compliance abroad.

🏔️ 4️⃣ Why Svalbard Requires Separate Analysis

Svalbard occupies a distinctive legal and fiscal position within the Kingdom of Norway.

Accordingly, it should not automatically be assumed that every international tax agreement applying to mainland Norway applies identically to Svalbard.

For any particular treaty or information-exchange mechanism, the territorial scope of the instrument must be examined carefully.

This is particularly relevant when considering:

• Exchange of Information on Request (EOIR)

• Automatic exchange arrangements

• Multilateral tax cooperation agreements

• Bilateral tax treaties

🔎 5️⃣ International Exchange of Information

Where HMRC cannot obtain information directly, international agreements may sometimes allow the UK to request assistance from another jurisdiction's tax authority.

Whether such a route is available for information physically or legally situated in Svalbard depends on the territorial scope and operation of the relevant agreement.

It would therefore be unsafe to conclude simply from Svalbard's special status that