UK Offshore tax evaders to face tough new criminal sanctions

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Tax avoidance and evasion has been much in the news recently, with focus on whether it is legal or morally correct and the impact it has upon the UK economy.

Both avoidance and evasion require an act or omission so that something which should happen (e.g. paying tax) does not happen. However, evasion also requires some deception or wrongdoing underlying the act or omission.

Evasion is also defined in respect of obligations, it is a conscious failure to observe an obligation which makes evasion wrong and illegal.

So it is very important to get things right, even more so in view of HMRC’s announcement yesterday.

The UK’s HM Revenue & Customs (HMRC) is responsible for making sure that the money is available to fund the UK’s public services and for helping families and individuals with targeted financial support.

In the last few years there has been progress in tackling offshore tax evasion through agreements with Switzerland, Liechtenstein and the Channel Islands. However, these offshore disclosure agreements will close 31 December 2015 and be replaced by a tougher last chance facility ahead of the automatic exchange of tax information with over 90 countries, including tax havens, from 2017.

So offshore tax evaders and the professionals who enable tax evasion will face even tougher sanctions under the new regime, which includes:

– A new criminal offence for offshore evasion – so in the worst cases it’s no longer possible to plead ignorance in an attempt to avoid criminal prosecution.

– A new criminal offence for corporates who fail to prevent tax evasion or the facilitation of tax evasion.

– Increasing the financial penalties faced by evaders – including, for the first time, linking a penalty to the value of the asset hidden offshore.

– New civil penalties on those who facilitate evasion so they will face the same penalty as the tax evader.

– Publicly naming both evaders and those who enable evasion.

HMRC launched four consultations which will run to 08 October (12 weeks)

Link to consultation

Source: HMRC news release – Jul 16, 2015 10:43 BST

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