Delay in prosecutions harms crackdown on offshore evasion

The taxman’s clampdown on offshore evasion is being undermined by the failure
to secure a high-profile criminal prosecution of a British investor, tax
partners have warned.

Last August, Dave Hartnett, then acting chairman of HM Revenue & Customs
and now permanent secretary for tax, said he expected to start its first
prosecution of a British investor ‘within months’.

One potential area for a prosecution was the 300 UK investors with
Lichtenstein-based bank accounts – ranging from professional investors and
writers and including some ‘household names’, Hartnett said.

But since then there has been no news of a prosecution. Tax experts say a
couple of prosecutions of Britons with offshore accounts would be a powerful
deterrent and increase the impact of a second amnesty, preparations for which
are expected to start by the end of next month.

In 2007 HMRC raised £400m after British taxpayers with money in offshore
accounts run by high street banks were granted leniency in return for voluntary

Stephen Camm, a tax partner at PricewaterhouseCoopers, said: ‘The ultimate
fear for tax evaders is prosecution and the shameful publicity and threat to
liberty this brings.

‘Unless HMRC successfully bring a prosecution of someone who has deliberately
money abroad to avoid tax, risk takers will sit tight and wait for HMRC to find
them rather than coming forward to voluntarily disclose unpaid tax,’ he added.

‘The lack of prosecution cases is currently undermining HMRC’s strategy to
recover tax on money squirrelled away in tax havens.’

Stephen Besford, a tax director at BDO Stoy Hayward, added: ‘If HMRC are
going to prosecute some fairly high profile names
over the use of an offshore bank account it would have a much bigger impact if
they did it ahead of a second offshore amnesty.’

An HMRC spokesman said: ‘What we can say is that we want to ensure we
prosecute wherever that is appropriate and wherever it represents the best value
for customers.’

He added that HMRC preferred to deal with tax fraud through
civil action.

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