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Offshore tax evaders to face criminal sanctions

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16th Jul 2015
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Offshore tax evaders and accountants who enable tax evasion may be imprisoned under new rules, Treasury financial secretary David Gauke announced on Thursday.

The new regime, which HMRC will consult on, includes:

  • A new criminal offence for offshore evasion – so in the worst cases it’s no longer possible to plead ignorance in an attempt to avoid criminal prosecution.
  • A new criminal offence for companies who fail to prevent tax evasion or facilitate it.
  • Increasing the financial penalties faced by evaders – including, for the first time, linking a penalty to the value of the asset hidden offshore.
  • New civil penalties on those who facilitate evasion so they will face the same penalty as the tax evader.
  • Publicly naming tax evaders and those who enable evasion.

“We’ve already seen over 90 countries across the world sign up to automatically exchange information on taxpayers," Gauke said at HMRC’s "stakeholder" conference in London. "This, together with our new sanctions will mean there is nowhere left to hide for offshore tax evaders.”

Some accountants had concerns about the new sanctions.

Nigel May, tax partner at MacIntyre Hudson, said: "The fact that you will be able to be criminalised without intent is bad for justice. It is relatively common to encounter individuals still who take the view say that because the own property in Spain and have paid income tax in Spain on that property that they have no disclosure requirement in the UK."

John Cassidy, partner at Crowe Clark Whitehill, said: "I wonder if the word [tax] 'evasion' will eventually become watered down to include aggressive avoidance."

HMRC said it has collected over £2bn from previously undisclosed offshore income through agreements with Switzerland, Liechtenstein and the Channel Islands.

These offshore disclosure agreements will close early (31 December 2015) and be replaced by a tougher last chance facility ahead of the automatic exchange of tax information with over 90 countries, including tax havens, from 2017, HMRC said.

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By The VAT Doctor
17th Jul 2015 10:30

Mapeley

HMRC's comments might be more valid had they not sold off their buildings on a sale and leaseback deal with a known tax avoider (Mapeley), costing the UK millions in tax.  Or is State Sponsored avoidance OK?

Unless I am mistaken, the Human Rights Act still applies, so presumably this would prevent a kangaroo court type justice system and would require HMRC to find evidence of intent to commit a crime.

 

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By abaco
17th Jul 2015 20:13

Facilitators

As penalties for those who "facilitate" or "enable" tax evasion are included, does this mean that ex PM and finance director of Luxembourg, Juncker could now face the prospect of prosecution?

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By mikefleming3028
20th Jul 2015 14:56

What is HMRC`s current Criminal Prosecution Policy?

If you read the Guidance issued by The Commissioners you would be forgiven for forming the view that there is a policy to settle matters  using Civil procedures unless there are circumstances that take the offence to the next level ie Criminal fraud. HMRC guidelines as to when they will consider a criminal prosecution are very clear at least I thought they were. HMRC Criminal Prosecutions  are set to increase and despite what Mr Gauke has to  say on the subject I would forecast that it will not be big business that gets clobbered for reasons to obvious to go into here. The Government can through another £60M towards funding additional prosecutions aimed at high net worth individuals an Corporates but I am taking bets that as usual what happens in practice will not be what Parliament intended, it is after all easier to pursue the small fry as opposed to the shark and a prosecution is another box ticked and targets met.

From my personal experience the current policy on prosecutions has been scewed to fit the targets imposed on HMRC and I am under no illusions that we  won`t have more of the same as a result of these proposed changes.

If any one is in doubt then I would invite you to look at the level of HMRC prosecutions  over the last two full years. I think that the total  absence of large Companies is a give away as to HMRC`s motives and more worrying the size of the sums subject to prosecution have fallen dramatically.

My challenge to HMRC Commissioners is if they have changed their policy then please have the honesty to say so,  ie issue an updated statement. If their policy remains unchanged then how do we explain the level at which HMRC has resorted to a  criminal prosecution,the answer lies in HMRC`s own stats.

The additional expectations placed on HMRC to up their game on avoidance  and evasion is to be commended, what has me worried is how HMRC will implement these new powers given their previous record of reacting to such Political pressure. The temptation will always be to play the numbers game,  a game at which HMRC on past evidence excels.

It used to be that after 40 years of working in tax I pretty much knew were I was most of the time. However of late I feel that someone has tampered with my  tax compass and certainty of destination  has now been replaced with navigation on a wing and a prayer.    

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By MicheleGibson
15th Jun 2016 08:00

Tax is very important one for Goverment and worlds and also in each country this only to fix the economy rate for each country but most of the peoples not follows the rules and could not pay for this tax. this is act of law it since of most bad think.
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