Offshore tax evaders face new criminal offence

by Calum Fuller

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19 Aug 2014

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HMRC building

FAILURE TO DISCLOSE taxable offshore income and gains is to be treated as a new criminal offence, under proposals announced today.

In two consultation documents, HM Revenue & Customs is seeking views on the design of the new criminal offence, appropriate safeguards and also tougher civil sanctions for offshore evaders including those who move their taxable assets between offshore banks in different countries in an attempt to hide their wealth.

The majority of offshore cases will continue to be dealt with through a civil approach, the taxman said.

The consultation examines situations in which individuals move assets from one offshore centre that has tightened its tax-information-sharing laws to another that has not.

The 20-year rule limiting how far back HMRC can examine taxpayer's affairs could also be suspended.

CIoT council member Gary Ashford, who represents the instute on HMRC's Compliance Reform Forum, said the consultation appears to be a very open one.

"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," he said.

"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, said 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," he said. "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."

Both consultation periods end on 31 October 2014.

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