HMRC is consulting on proposals to introduce a new criminal offence for those with off-shore tax accounts.
Details of the offence of failing to declare taxable off-shore income and gains is set out in an HM Revenue and Customs (HMRC) consultation paper published this week, which asks for views on how the offence will be constructed and used by HMRC.
David Gauke, Financial Secretary to the Treasury, says: “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.”
Although Peter Vaines, partner Squire Patton Boggs (UK) LLP agrees that there should be criminal penalties for people who evade taxes he has concerns about the route the Treasury has chosen: “HMRC have decided to introduce a new strict liability criminal offence of failing to declare an offshore account containing taxable income and gains.
“`Strict liability’ means that you are guilty even if there was no intention to commit the crime.So you are guilty and can be fined or sent to prison, merely for having money in an overseas account and not telling HMRC. There is no defence and no excuses.”
He adds, however, that with a little linguistic ambiguity, HMRC have suggested that there may be defences to this new offence: “For example if the offshore account did not contain anything taxable. The funds might have arisen during a period of non residence or may have been a gift from a third party, or maybe the taxpayer is a non-dom and claiming the remittance basis.”
The majority of offshore cases will continue to be dealt with through a civil approach and a second paper sets out the government’s plans to introduce 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 and evade tax.
