HM Revenue & Customs (HMRC) has launched a consultation on making the failure to declare taxable income and gains arising offshore a criminal offence, as part of the department’s No Safe Havens strategy, which forms part of the Government’s crackdown on tax evasion.
According to the proposals, an individual could be prosecuted whether they had acted with the intention of defrauding the taxman or not. However, the Revenue said that the offence would apply only to cases over a certain financial threshold.
At the moment, not declaring taxable offshore income and gains is a civil offence, not a criminal one but the consultation is looking for views on the on the design of the new offence and on what the appropriate safeguards should be. The department is also considering suspending the 20-year rule limiting how far back it can look at a taxpayer’s affairs.
According to the taxman, the majority of offshore cases will continue to be dealt with through a civil approach and the department will also consult on plans to introduce tougher civil sanctions for offshore tax evaders, including those who move their taxable assets between offshore banks in different countries in an attempt to hide their wealth.
Commenting on the consultation, Financial Secretary to the Treasury, David Gauke, said that those who use offshore secrecy to evade UK tax are making a ‘big mistake’, as investors must pay the tax they owe here.
He added that over 56,000 people have already told the taxman about what they owe offshore and HMRC has offered opportunities to clear things up as quickly and easily as possible. However, he warned that those who don’t come forward must face tough consequences, including a criminal conviction.
The consultation is open to anyone involved in offshore investments, including taxpayers who may be affected by the new offence, and interested parties have until 31 October to give their feedback.