Offshore tax evasion could become a criminal offence

20th August 2014 | News

People who fail to disclose taxable offshore income and gains will be in danger of criminal prosecution, under new proposals announced this week.
HM Revenue and Customs (HMRC) is seeking views on the design of the new criminal offence, appropriate safeguards and more stringent civil sanctions for offshore tax evaders; including those who move taxable assets overseas between offshore banks in a bid to hide their actual wealth.
Nevertheless, the tax authority has confirmed that the majority of offshore tax evasion cases will continue to be dealt with using a civil approach.
In HMRC’s two documents, available for consultation until 31st October 2014, it examines situations in which individuals move assets from one offshore bank that may have strengthened its tax data sharing laws to another that has not yet done so.
HMRC is also considering a suspension of the 20-year rule limiting how far back they can examine a taxpayer’s financial affairs.
Gary Ashford, council member of the Chartered Institute of Taxation, believes the consultation appears to be wide open, allowing for the discussion of multiple safeguarding options.
“Having read the documents, there’s no attitude of ‘thou shalt not do this or that’. Several options have been put forward and it’s open to views and dialogue,” said Ashford.
“There is a risk in terms of strict liability safeguards, which could entail changes to tax returns and burden taxpayers.
“In terms of the civil powers, there is merit to what they’re trying to do, and this illustrates HMRC’s long-term commitment to tackling offshore tax evasion.”
David Gauke, financial secretary to the Treasury, insists investors ‘must pay the tax they owe here’.
“Thanks to this government’s leadership, countries across the world have agreed to share information on offshore accounts,” added Gauke.
“Over 56,000 people have already told HMRC about what they owe offshore and HMRC has offered opportunities to clear things up as quickly and easily as possible.
“Those that don’t come forward must face tough consequences, including a criminal conviction.”

Image: HMRC