The Continued Pursuit of the Offshore Golden Goose

Wed 25 Nov 2015

The Government remains convinced that there are pots of evaded tax still sitting outside the UK and – despite diminishing returns from its ‘disclosure facilities’- is determined to penalise those involved with yet higher civil penalties and even some strict criminal penalties for ‘the most serious cases’.

The way that the Government keeps on about offshore tax evasion, you’d think that there were a whole flock of golden geese out there nursing clutches of golden eggs bearing a hallmark that said “Property of the UK Government”. Admittedly, the Offshore Disclosure Facility back in 2007 brought in quite a few million pounds to the Treasury, as did the ‘New Disclosure Opportunity’, and the Liechtenstein Disclosure Facility (LDF) of 2009 has brought in over a billion – but that was in large part due to all those tax evaders who had hidden their funds in Switzerland and used the LDF to get the benefit of a lower penalty and the guarantee of immunity from prosecution.

However, more recent disclosure facilities such as those relating to the Crown Dependencies (Jersey, Guernsey and Isle of Man) have brought in much smaller amounts and what was once a flood has reduced to a trickle – and yet the Government – or is it HMRC? – appear to remain convinced that there is money in them there offshore hills.  And that’s why they are introducing yet more – and more serious – penalties.

In the Autumn Statement, the Chancellor is proposing to introduce an even higher civil penalty for those who deliberately evade taxes through an offshore connection, including the introduction of a new penalty linked to the value of the asset on which tax was evaded and “increased public naming of tax evaders”. Given that the current maximum penalty is 200% of the tax, one wonders what an even higher penalty might achieve. And we already have a ‘name and shame’ regime for those whose evasion amounts to over £25,000 so one wonders what “increased public naming” could look like – Perhaps it will involve a larger font size?

But for the ‘most serious cases’ the Government will introduce a new criminal offence that removes the need to prove intent for failing to declare offshore income and gains. Again, one wonders at the point when there are already provisions in the legislation for the criminal prosecution of tax evasion. The trouble with such statements is that they fail to define terms such as ‘most serious’ – which leads to the awful suspicion that most serious will actually simply equate to ‘most money’.

Whatever, clearly there remains a belief on the part of the Government that, somewhere, offshore there is that nest of golden eggs that will fill the hole in the Treasury – but whether this legislation will bring the geese home to roost – and whether such fabulous beasts actually exist – remains to be seen.

For further information contact tony.monger@mazars.co.uk