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Plan revived to tackle offshore evasion
The government has announced a second consultation of its plan for a strict liability criminal offence for taxpayers who do not declare offshore income.
The Treasury document Tackling Tax Evasion and Avoidance provides details of the chancellor’s Budget proposals to increase compliance.
A consultation on a strict liability offence – one that does not require demonstration of mens rea – was held last summer, with the measure apparently dropped some months later.
The revival comes in an increase in countries agreeing to participate with the UK in automatic exchanges of financial information from 2017 (or 2018 in some cases), according to the Treasury, which plans to seek expert views on appropriate defences and thresholds, before legislation is introduced. It will be accompanied by a new offence of corporate failure to prevent evasion or the facilitation of evasion.
The government is also set to consult on the introduction of new civil penalties for those who assist tax evasion. The sanctions will include one under which enablers will pay a fine equivalent to that paid by each individual they helped to evade tax.
Tax disputes expert Simon Wilks forecast a “sea change for companies who come into contact with people intent on cheating. Companies will not only have to ensure they are not helping people to evade tax but also stop evasion happening.
“The fact the government is consulting… recognises the challenges: how do companies stop people intent on concealing assets and cheating tax? It is unclear whether bosses could be personally liable for an employee’s, client’s or customer’s misdeeds,” added Wilks, a tax partner at PwC.
The Chartered Institute of Taxation’s tax policy director, Patrick Stevens, suggested the latest government plans are redundant, with similar laws already in place.
He said, “If a bank employee, for example, has knowledge of or suspects, or has reasonable grounds for knowing or suspecting an occurrence of money laundering, which can include tax evasion, he or she can be liable to a criminal offence under the Proceeds of Crime Act 2002. The same person commits an offence if they are involved in arrangements they know or suspect facilitate money laundering by another person.”
The new Treasury document also addresses domestic tax avoidance by asking regulatory bodies to take a greater responsibility in setting and enforcing clear professional standards relating to the facilitation and promotion of avoidance, in an effort to protect the reputation of the tax and accountancy professions.
The paper states that the accelerated payments regime is “having a very positive effect”, and, as a result, HMRC are to issue 21,000 more notices than first planned, bringing in an additional £555m. An estimated 64,000 users of avoidance schemes will have been required to pay tax upfront by the end of 2016.
