‘Strict liability’ move could penalise honest errors, CIoT warns

THE GOVERNMENT’S MOVE to introduce criminal ‘strict liability’ measures for those with undeclared offshore income and assets have been roundly criticised by the CIoT.

While welcoming the announcement that the offence will be targeted at only the “most serious” offshore tax evaders and a threshold of £5,000 of under-declared tax before the new offence can be used, the CIoT claimed it does not alter the fundamental unfairness of creating a criminal offence which will require no proof of intention.

HMRC began consultation on the move last year, in which it said the majority of offshore cases will continue to be dealt with through a civil approach.

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

Patrick Stevens CIoT tax policy director said: “Tax evasion is a serious crime. The government are right to have put additional resources into investigating and combatting it. There is already tough legislation in this area, but if the government feel it needs strengthening further in particular areas then it is reasonable of them to look at how this can be done.

“However any new measures should be based on sound legal principles. One of these is that in order to make a criminal conviction it should generally be required to show that the act was committed with criminal intent unless there is potential for an immediate threat to public safety. The proposed strict liability offence for failing to declare overseas income and gains fails this test.

“A taxpayer may fall within the ambit of the offence without any intention or knowledge on their part.”

Related reading