UK Plan New Penalties For Offshore Tax Evasion

April 14, 2014

220px-George_osborne_hi The UK government plan to introduce new rules which will make it easier to prosecute individuals who hide their money offshore.

According to the official UK Government website, under the plans announced by the Chancellor, HM Revenue & Customs [HMRC] would no longer need to prove that individuals who have undeclared income offshore intended to evade tax, in order for a criminal conviction to be handed down.

At present, HMRC has to demonstrate that even when someone failed to declare offshore income, that the individual intended to evade tax.

This change will mean HMRC only has to demonstrate the income was taxable and undeclared meaning it will be easier to secure successful prosecutions of offshore tax evaders.

The official statement said, “As well as introducing the new criminal offence, the government will consult on a range of options building on the existing penalties faced by those hiding their money in offshore accounts – currently up to 200 percent of the tax owed – to make sure they act as a clear and effective deterrent.

“The consultation will look at whether the existing penalty limit should be raised further, how penalties could be increased if individuals try to move money around in a bid to avoid detection and extending the penalty regime to include inheritance tax.”

Chancellor of the Exchequer George Osborne [pictured] said, “The government has taken significant steps to clamp down on those hiding their money offshore. HMRC has brought in over £1.5 billion over the last two years and, through our leadership at the G8, we have taken significant steps towards greater transparency and tax information sharing.”

“Those who continue to believe they can hide wealth offshore should know that there is no safe haven and that serious consequences await them.”

Bill Dodwell, head of tax at Deloitte, told the Times newspaper the plans were “horrifying”.

“People should not be put in prison unless you can prove intent,” he said. “I’m shocked to find that an offence which could lead to a prison sentence could be decided on a strict-liability basis. If this change applies to all evasion cases I think that’s unacceptable.”

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Comments (7)

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  1. Meeeee says:

    In another story, Belco’s profits are reported as being materially down. Belco is often thought of or presented as a predator company. Belco isn’t.

    George Osborne and the UK Treasury are real predators. Cold, disciplined, relentless. Despite the fact that UK is Bermuda’s ‘mother country’.

  2. Coffee says:

    Mothers rarely take food from their children’s mouths , but then again when your mother is England … The Empire strikes again !

    • Mike Hind says:

      How is this in any way “taking food from their children’s mouths”?

      • Marie says:

        Mother – UK
        Children – Dependant Territories
        Food – International Business
        Do you need a crayon to connect the dots?

        • Mike Hind says:

          So… penalizing people, or increasing penalties on people who are breaking the law – which is what they’re talking about here – is “taking food from their children’s mouths”?

          Seriously?

  3. Valirie Marcia Akinstall says:

    Who is Bill Dodwell kidding? Once this law is primary legislation who will have sympathy for tax evaders and/or avoiders, living and/or working outside GB? Certainly not the average Brit who has been forced into a higher tax band to compensate for the loss taxes as the wealthy refuse to pay their taxes. Everyone in GB has to pay their fair share of taxes, why should the Brit who lives outside the UK be an exception, flaunting the fact that they can afford to conceal their wealth from being taxed?

    Collecting the taxes could mean that GB does not have to borrow more money from IMF over the next few years. It could also mean that more people will have their tax band decreased as HMRC will collect what is legitimately owed from them. tax avoiders and/or evaders. It will mean more jobs as the economy kicks into high gear as the Government uses that restored taxes.

    Rather than making Bermuda accountable for getting their taxes for them (and there are some grey areas here), HMRC will penalise Brits who evade or avoid paying their taxes with draconian measures. Frankly, there should never be exceptions to paying your tax bill based upon your knowledge of the loopholes in the law and how to exploits those loopholes.

    This new law or amended law does not affect Bermudians nor is it detrimental to Bermuda, it seeks out Brits living and/or working outside Britain who refuse to pay their fair share of taxes in Britain.

    London, England

  4. Valirie Marcia Akinstall says:

    @Mike Hind…

    I do not get the impression that other commentators understand the article. Yes, Great Britain has been very adversarial towards Bermuda on the issue of tax evasion and/or tax avoidance. But this article targets the individual who hides his/her wealth and/or earnings from being tax by HMRC, not Bermuda.

    So, in essence Mike Hind’s question tries to highlight that it’s not about Bermuda and/or Bermudians. In my humble opinion, it’s about tax dodgers and their experts (accountants and/or lawyers) who use their expertise to aid these individuals to evade and/or avoid paying their taxes.

    Strict liability (as addressed by Bill Dodwell) is applied to companies that break the law, whether they do so with full knowledge that they are breaking the law, or claim to be absolutely clueless (and most claim the latter in court). Example, company dumps sewage in the ocean, they are strictly liable, or guilty under law, for the damages caused by their dumping and any subsequent costs that follow from their actions, such as, contaminants in the sewage that cause medical conditions in humans and/or animals. Strict liability can also incur criminal offences for the executives of the company without the prosecutor having to prove that they intended to cause harm and/or who authorised the dumping.

    Mike Hind, I have now agreed with you on an issue, but couldn’t you have just explained the issue to them rather than the challenge?

    London, England