New strict liability offence of offshore tax evasion

New strict liability offence of offshore tax evasion Monday, 14 April, 2014 The UK government is proposing to create a new criminal offence of failing to declare taxable offshore income. The offence is outlined in an updated version of HM Revenue & Customs’ strategy document No Safe Havens. It will be one of strict liability, with the burden of proof reversed so that no intent to deceive need be proven. HMRC has been reluctant to press for criminal sanctions in the past, because proving fraudulent intent to the criminal standard was usually difficult. This is certain to meet opposition, Deloitte’s Head of Tax Bill Dodwell was quoted as calling the plans ‘horrifying and unacceptable … I am shocked that an offence which could lead to a prison sentence could be decided on a strict liability basis,’ he said. Penalties for conviction under the new offence will include prison sentences, although no further details are given in the paper. Some reports suggest that the relevant legislation will be added to the 2014 Finance Bill, but given the promise of a consultation later this year on the offence and the ‘appropriate safeguards’ this seems unlikely.

Other new additions to the offshore enforcement strategy include: increasing existing civil penalties for tax evasion; paying bounties to those who provide information on offshore tax evasion; new legislation to implement the OECD standard on automatic inter-governmental information exchange.

This change will have important implications for taxpayers throughout Northern Ireland

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