Chancellor George Osborne will today (April 14) launch a consultation on a new criminal offence carrying a possible custodial sentence that will catch people with undeclared foreign income, even if they did not intend to evade taxes.
Currently, to prosecute, the taxman has to prove a person holding income offshore intended to evade paying tax but, under the proposals, there would be a new criminal standard where officials would only have to show money was taxable and undeclared.
However, this is just one of a number of measures proposed by the Chancellor in his recent Budget to give further powers to HM Revenue & Customs (HMRC) in a bid to stamp out tax evasion and the moves are alarming ministers and other commentators, who warn of the dangers to civil liberties.
The Commons Treasury Committee, chaired by Andrew Tyrie, is to examine the proposals and take “further evidence on the extension” of the taxman’s powers, including their right to take money direct from taxpayers’ bank accountants to recover unpaid tax bills.
Mr Tyrie said that, while he sympathised with Mr Osborne’s desire to ensure that all due tax is paid, there must be “an essential balance” between the powers that HMRC needs and protection for individuals.
However, the amount of money lost to the Treasury through tax evasion and avoidance would be enough to alleviate the need for new spending cuts after the election next year to eliminate the deficit, so it is not surprising that the Chancellor is investigating every avenue in a bid to claw it back.
According to official figures, businesses and individuals paid £35bn less than they should have done in 2011 to 2012, with almost £10bn lost to evasion and avoidance, while the Chancellor is talking about a £12bn cut to welfare.