Not so criminal after all? HMRC changes its tune on offshore evasion
Wed 03 Dec 2014
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 foul of HMRC’s initial proposal.
Buried away in the Autumn Statement is a reference, at paragraph 2.155 of the mian document, to a ‘strengthening of the civil deterrent for offshore tax evasion’. The major impact of the proposal, apart from extending the offshore penalty regime to include IHT, is the imposition of an additional 50% penalty for moving hidden funds about.
What makes the proposal interesting is that it is in marked contrast to earlier suggestions by HMRC that any offshore evasion should result in an automatic criminal offence. Those proposals were greeted with something of a howl of protest from the accountancy profession – not because of a desire on the part of the profession to defend criminal tax evaders – but because of the potential that it had for turning many an innocent taxpayer into a criminal. Mazars was one of many firms who wrote to voice their concern that the proposal had the capacity to literally criminalise anyone who failed to declare even the smallest amount of offshore income – so that, for example, anyone with an offshore property, such as a time share, and an offshore account (which is often a pre-requisite to a holiday property in another country) who failed to declare £1 of bank interest or letting profits could find themselves subject to criminal prosecution.
The consultation has now ended and HMRC has not published any response other than this entry in the Autumn Statement which refers to this legislation as being introduced ‘following consultation’. One can only hope that wiser counsel has indeed prevailed.
At the same time, it is clear that HMRC has not entirely given up on attempting to capture all those wicked offshore tax evaders as they are also proposing to ‘enhance’ the financial incentives that they offer for offshore intelligence. In other words, they appear to be intending to increase the payments they will give to informants who spill the beans on offshore evaders!
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