Offshore tax penalties could aid tax evaders
Lawyers warn that flagging up the locations of most concern to HMRC could encourage tax evaders to move funds to those areas
Lawyers warn that flagging up the locations of most concern to HMRC could encourage tax evaders to move funds to those areas
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NEW OFFSHORE tax penalty guidelines provide a “beginner’s guide to tax evasion“, a leading tax investigator has warned.
The new penalties, which allow for fines of up to 200% of a taxpayer’s liabilities, could drive tax evaders towards “opaque” offshore jurisdictions, the head of tax investigation at McGrigors has said.
HM Revenue & Customs announced yesterday that countries would be divided into three categories based on their willingness to share information about account holders with the UK. But Phil Berwick, of McGrigors, warned that some tax evaders consider the chances of being caught as a higher priority than potential fines.
“The list reads like a beginner’s guide to tax evasion,” he said.
“Determined tax evaders might take the view that if HMRC cannot get information from these jurisdictions, the enhanced secrecy and reduced risk of detection more than compensate for the possible 200% penalty.”
He added that there was an obvious loophole in that corporation tax fails to be covered by the penalties.
“An individual with undeclared funds offshore could face a 200% penalty, whereas if the offshore funds are subject to corporation tax the new rules do not apply and the maximum penalty will be a 100% of the tax liability irrespective of the territory,” said Berwick.
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