Anti-evasion power removes need for proof of intent

HMRC are to have new powers that make it easier for the department to prosecute people who hide money offshore.

The introduction of the offence of failing to declare taxable offshore income will mean any person with undeclared foreign income can face criminal action, even if they did not intend to evade taxes.

The Revenue currently must demonstrate intent, but the change of law will require the department to show only that income was undeclared and taxable and undeclared.

The tax authority is to consult later this year on the details of the planned offence and the appropriate safeguards to prevent its abuse.

There will also be public scrutiny of a range of options that build on the penalties faced by those who do not disclose assets in offshore accounts. The consultation will look at whether the existing fine limit ought to rise, increasing sanctions when individuals try to move money around to avoid detection, and extending the penalties regime to include inheritance tax.

Phil Berwick, head of contentious tax at law firm Irwin Mitchell, claimed the introduction of the offence – which will be a strict liability law – represents a “fundamental shift in the burden of proof” that suggests the government is “becoming more desperate” in its attempts to plug the tax gap.

He warned the Revenue could focus its efforts on “soft targets, while hardcore evaders will evade punishment”.

Berwick added, “HMRC have had a significant amount of data on offshore offenders for a long time, but failed to pursue criminal investigations. They already have sufficient powers to pursue these taxpayers. Where will their quest for increased powers end?”

Issue: 4448 / Categories: News , Admin , Compliance , Investigations