People holding undeclared accounts offshore could face prison terms even if they did not intend to evade tax under HMRC proposals
FURTHER POWERS are set to be afforded to HM Revenue & Customs as the government looks to tighten the noose on those holding funds offshore and maximise its revenues.
Already, the taxman has added to its arsenal. Avoidance schemes that bear similarities to others already blocked, will be forced to pay the disputed tax up front before the case is heard at tribunal.
In the Budget, the chancellor (pictured) then announced a consultation on proposals that would allow HMRC to directly access debtors’ bank accounts to deduct tax due – provided £5,000 is left across the accounts.
The latest document, No Safe Havens, outlines plans to introduce a new criminal offence carrying a possible prison sentence for people holding undeclared money offshore, even if they did not intend to evade taxes.
Currently, HMRC must prove individuals intended to evade tax on foreign income.
It is expected the threat of prosecution will see evaders more likely to come forward and declare overseas accounts.
The Treasury also hopes to see its yield increase as information exchange agreements with perceived tax havens including the Cayman Islands, the Isle of Man, Jersey and Guernsey come into force.
Despite those deals, significantly less than the £3bn target will be generated through the tax deal targeting UK residents with accounts in Switzerland.
Tax assurance director Edward Troup and director-general Jim Harra admitted in a hearing with the Public Accounts Committee in October that £440m had been recovered last year and £782m received in total since the deal was signed in 2012.
Founding partner of tax investigations firm Watt Busfield, Rebecca Busfield, said: “HMRC have clearly reacted to parliamentary criticism of their perceived poor record in prosecuting alleged tax evaders, highlighted by the spectacular failure to obtain a conviction in the trial in 2012 of a high profile football manager.
“Nor has their case been helped by the disappointing level of receipts from disclosure arrangements with Liechtenstein and Switzerland. Without doubt the proposed new criminal power will greatly assist in flushing out hidden assets which were moved to what were seen to be safer havens in anticipation of the attacks on hitherto opaque banking systems.”