According to its research, the majority of those who claimed to leave tax unpaid were living in low-tax jurisdictions, such as Liechtenstein or Switzerland.
The law firm said that the unpaid tax was on income or capital gains generated in the UK and then held offshore in bank accounts, trusts or companies within these jurisdictions.
It now predicts that HMRC is likely to take a “more aggressive approach” when investigating tax exiles admitting tax avoidance in efforts to increase its compliance revenues to cover coronavirus-related public spending.
A disclosure of unpaid tax can be made to the HMRC under the Worldwide Disclosure Facility, with admission given in return for facing a less severe penalty.
Some 42% of expats who admitted tax avoidance to HMRC last year were from the Channel Islands, whilst 8% lived on the Isle of Man and 6% were in Switzerland. Tax exiles were also recorded in Hong Kong, Bermuda and Mauritius.
According to Pinsent Masons, the “rapid rise” in disclosures has followed changes to legislation which have “brought more expat tax exiles into the UK tax net”, thereby forcing more disclosures.
In addition, the rise also follows HMRC’s newfound efforts to profile UK property where ownership rights are held offshore, and determine if it is rented with rent therefore subject to UK tax.
Pinsent Masons added that HMRC is currently pursuing third party businesses, such as accountants and financial advisers, who may have facilitated offshore non-compliance, issuing civil penalties or prosecuting businesses for not having “reasonable procedures to prevent employees from conspiring with clients”.
Jason Collins, head of tax and partner at Pinsent Masons, said: “Non-UK residents, including UK expat tax exiles, have been forced to come forward as changes to legislation and HMRC campaigns start to bite.
“The surge in disclosures last year has provided HMRC an even better understanding of the offshore market – and coupled with increased cross-border data sharing has given HMRC hundreds of new targets for its investigations.”
He added: “Given the pressure the UK’s public finances are under due to the coronavirus crisis, we can expect many of these to be followed up on.
“The surge in disclosures comes shortly following the complete roll out of a global transparency initiative that gives HMRC unprecedented amounts of data on UK taxpayers’ offshore activities.”