HMRC has published a consultation document setting out its plans and proposals to tackle offshore tax evasion, including the introduction of new criminal offences for individuals failing to comply with tax laws, even where there is no deliberate tax evasion. This would be an important increase in the potential sanctions that could be imposed on people who have outstanding tax liabilities.
The document, "Tackling offshore tax evasion: A new criminal offence", states that the minority of would-be taxpayers who fail to satisfy properly their tax liabilities impose "an unfair burden on the honest majority and prevents money from reaching the crucial public services that need it".
To combat this, HMRC now proposes that UK taxpayers who fail to declare their foreign income, capital gains or assets should be convicted of the new criminal tax evasion offence on a strict liability basis - that is to say, potentially as a result of carelessness and not solely where criminal intent or dishonesty is apparent. The consultation invites opinions on whether a defence should be permitted where individuals can show that they took "reasonable care" in conducting their tax affairs, or had "sought and followed appropriate professional advice", although it seems that - pending the outcome of the consultation process - no such statutory defence is envisaged by HMRC
HMRC estimates that the 2010/11 financial year 'tax gap' was £32 billion and that "tax evasion and avoidance" accounted for a cumulative £9 billion of this shortfall. The document explains that HMRC has raised £547 million from voluntary disclosures (and a further £140 million from "follow-up activity including 20,000 completed investigations"), and that HMRC is taking swifter legal action against tax evaders, and is allocating more resources with the objective of increasing the pace and number of tax evasion cases brought before the criminal and civil courts.
To sharpen the focus of people with outstanding tax liabilities, the consultation states that financial...