Finance Bill 2016: New Criminal Offence for Offshore Tax Evasion
Fri 18 Dec 2015
As confirmed at the Autumn Statement, the government has decided to press ahead with a new criminal offence for significant cases of offshore tax evasion. The commencement date is not yet known, as a number of other changes in relation to offshore tax evasion are also being introduced, and their introduction is to be coordinated. Once introduced, the offence will only start to apply in respect of tax returns filed from the tax year in which it is introduced. Taxpayers convicted under this offence will face a fine (which will be unlimited in England and Wales) or a prison sentence or both.
The driving force behind the new offence is HMRC’s poor record in successfully prosecuting offshore tax evaders. Critically, the new offence does not require HMRC to prove criminal intent. The offence will apply where taxpayers fail to notify HMRC of their liability to pay income tax or capital gains tax, or fail to submit a return or submit an inaccurate return in relation to offshore assets and activities. As there will be a threshold (of not less than £25,000 per tax year – to be set by Regulations) in lost income tax and /or capital gains tax, the offence will be limited to serious cases of offshore tax evasion.
There are a number of situations where the new offence will not apply:
The Autumn Statement contains what appears to be a quiet climb down by HMRC on a proposal to treat offshore evasion as automatically giving rise to a criminal offence. Instead HMRC appears to be contenting itself with a punitive – but civil – penalty.This is good news for innocent taxpayers who might well have fallen […]
The Government has decided that a new ‘strict liability’ criminal offence should be introduced for those failing to declare taxable income and gains arising offshore. This statutory presumption of guilt is highly controversial as it means that HMRC will not have to prove intent to the criminal standard of beyond reasonable doubt.
Tougher civil measures are being introduced by Finance Bill 2016 to act both as an increased deterrent against offshore tax evasion and as a sanction where such evasion takes place. The commencement date of these new provisions has yet to be decided. Increased penalties The minimum penalties will be increased by 10% of the potential […]
Following earlier scandals, it is not surprising that Finance Bill 2016 introduces new civil penalties for individuals or businesses that deliberately assist taxpayers in evading tax by hiding assets, income and gains offshore. The penalty can be up to 100% of the tax evaded (or £3,000 if higher), although the penalty may be reduced for […]
Further to the announcement at the Summer Budget 2015, and the subsequent consultation, the Draft Finance Bill 2016 includes provisions to withdraw the ‘wear and tear allowance’ currently available to landlords of fully furnished residential property, replacing this with a deduction for the cost of replacement furniture. The ‘renewals allowance’ which is generally available to […]
Today, the Finance Ministers from 51 countries and jurisdictions have signed a Multilateral Competent Authority Agreement on the implementation of the Global Standard for the automatic exchange of financial account information. The signature of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters was warmly welcomed by Commissioner Šemeta. The new OECD/G20 standard on […]
George Osborne delivers the Coalition’s final Autumn Statement in the House of Commons on 3 December. We reckon he’ll use this opportunity to remind us of the economic achievements of the Coalition, but will there be carrots promising reductions in future tax bills? By good fortune or good judgment, the UK’s economic performance is top […]
One of the changes brought about as a result of the requirements of New UK GAAP is the way interest free loans and other non-market term loans are recognised in a company’s financial statements. Under Old UK GAAP (where FRS 26 had not been applied) these loans would have been accounted for at historic cost, […]
Rationale for change We have known for some time that from April 2016, the tax treatment of dividends received by individuals will be reformed. Every individual will benefit from a dividend allowance, which effectively taxes the first £5,000 of dividends at 0%, with dividends in excess of that amount being taxed at 7.5% within the […]
Action 2 of the G20-OECD Base Erosion and Profits Shifting (BEPS) projects concerns hybrid mismatch arrangements. These are arrangements intended to secure tax advantages (mismatches) within multinational groups resulting from differences in tax treatment of the same instrument or entity between different jurisdictions. Draft legislation has now been introduced in Finance Bill 2016 to implement […]
Although no cases have yet been heard by the GAAR Advisory Panel, the Government has felt the need to strengthen the deterrent effect of the GAAR by introducing penalties. In addition, some small procedural changes are proposed by Finance Bill 2016. The draft Finance Bill now includes the provisions for introducing a new penalty for […]
Following the public outrage at tax avoidance by large multinationals along with criticism of HMRC’s record at counteracting it, the government has acted to make the climate for tax avoidance for large businesses much tougher. First of all, there was the swift introduction of the diverted profits tax by Finance Act 2015, which comes into […]
The draft Finance Bill 2016 includes provisions to amend the existing patent box regime within Part 8A of CTA 2010, to bring it in line with the ‘nexus’ approach. Construction of the new provisions The majority of the new provisions are included within a new Chapter 2A to Part 8A of CTA 2010. Given the […]
Recent changes in HMRC’s Risk Assessment process means that a company or partnership that fails to address the Corporate Criminal Offence (CCO) requirements could find themselves facing annual enquiries into their tax affairs. The CCO legislation was introduced just over two years ago and imposes a potential criminal penalty on a Company that fails to […]
It seems that HMRC is immune to the very behavioural techniques which it has so enthusiastically adopted (such as the use of “nudge letters”) to influence taxpayers’ behaviour in complying with the UK tax legislation. In our blog on nudge letters, we highlighted that HMRC were hoping to make recipients of the letters feel uncomfortable […]
On 25 November 2015 HMRC published a policy paper announcing measures that took immediate effect to counter abusive practices involving plant and machinery capital allowances and leasing arrangements. These changes are estimated by HMRC to save the exchequer £5m between 25 November and 31 March and produce savings of £25m, £40m and £30m in the next […]
Following two consultations earlier this year, the draft Finance Bill 2016 introduces a new threshold condition for promoters of tax avoidance schemes (POTAS) where they have marketed multiple tax avoidance schemes which are regularly defeated by HMRC. The measure will apply where three such schemes are defeated over an eight year period, the result of which […]
The changes to the taxation of dividends from 6 April 2016 will see the differential between the rate of income tax on a distribution (up to 38.1%) and that of capital gains tax (as low as 10%, where entrepreneurs’ relief is available) at its greatest in recent years. In anticipation of this, a number of […]
On 16 March 2016, the HM Treasury has published a ‘Business tax road map’ which sets out the government’s plans for business taxes to 2020 and beyond. The road map brings to a conclusion several key areas of tax policy that have been under review. In particular it sets out a number of actions in […]
In the wake of the Panama scandal, the UK will now bring forward its plans to introduce a new criminal offence for corporations which fail to prevent their staff from facilitating tax evasion. These proposals were first raised at the March 2015 Budget, and outlined in detail in a consultation document issued on 16 July […]
This has been such a year for astonishing events – what with Brexit, Prime Ministers and party leaders resigning left, right and centre, along with terrorist atrocities, attempted coups and disasters on a scale that previously might not be imagined – that everyday matters like tax evasion and avoidance can seem quite mundane. All the […]
In the past few days HMRC have begun to provide some limited details of the next – and long promised – offshore disclosure facility. Referred to as the Worldwide Disclosure Facility or WDF, the disclosure facility will be open to anyone who is disclosing a UK tax liability that relates wholly or in part to […]
When does it start and who can use it? On the 5th of September 2016, HMRC finally published details of its new disclosure facility; the Worldwide Disclosure facility (WDF), which will run from the 5 September 2016 to 30 September 2018. HMRC has announced that this is a final opportunity for taxpayers who wish to […]
One sometimes wonders whether the Government has taken its inspiration from George Orwell’s 1984 or whether it is a symptom of HMRC’s decreasing staff resources but, increasingly, we see legislation that places the burden upon taxpayers to confess all their sins to HMRC and then take steps to put things right. Two examples of this […]
Thursday’s 26 October 2017 episode of EastEnders showed that loveable rogue Billy Mitchell was the subject of a HMRC compliance visit. Many of the businesses on the show are portrayed as family owned and managed and Billy is a Partner in one of these. He did not seek the help of tax advisors to assist […]
The Government has used the Autumn Budget to again send a clear message of its commitment to tackling tax avoidance and tax evasion especially in relation to offshore structures. The Government will soon be publishing the responses to a consultation document on the proposed requirement for designers of offshore structures that could be misused for tax […]
The draft Finance Bill 2016 introduces two key changes to the provisions allowing the averaging of profits for farmers and creative artists: the option of a new five year averaging relief for farmers – detailed below, and the removal of the marginal relief for farmers and creative artists under the existing two year averaging relief, […]
This website uses cookies.
Some of these cookies are necessary, while others help us analyse our traffic, serve advertising and deliver customised experiences for you.
This website cannot function properly without these cookies.
Analytical cookies help us enhance our website by collecting information on its usage.
We use marketing cookies to increase the relevancy of our advertising campaigns.
Comments