Bringing you live news and features since 2006 

Offshore tax evaders face imprisonment and enormous fines

RELATED TOPICS​

UK taxpayers who fail to disclose offshore income or gains, either by failing to notify HMRC of their chargeability to UK tax, failing to deliver a tax return or by submission of an incorrect tax return will face imprisonment and swingeing penalties says leading accounting, tax and advisory practice Blick Rothenberg.

Gary Gardner, a partner at Blick Rothenberg, says: “Individuals with offshore interests and their advisers should be aware that HMRC is committed to enforcing the new legislation introduced in FA 2016 in relation to undisclosed offshore income and gains in respect of which the maximum sanction is six months imprisonment.”
 
The new rules were devised partly in response to the immense political, media and public pressure for HMRC to criminally investigate and secure convictions against tax evaders, with the focus on wealthy individuals, and are likely to drive a further increase in the number of criminal investigations relating to offshore tax evasion.
 
Critically, the new rules do not distinguish between those who have intentionally misled HMRC and those who have merely “got it wrong” since the legislation is framed in such a way that the mere existence of undisclosed offshore income and gains is sufficient to enable the sanctions to bite. The prosecution does not have to prove that there was “mens rea” (a guilty mind). 
 
Despite the “strict liability” nature of the offence the taxpayer can put forward the defence that he had a reasonable excuse for the failures or inaccuracy. However the onus is squarely on the taxpayer to demonstrate this.
 
Gardner adds: “The offence applies from the tax year 2017/18 which means that HMRC will begin to take action from 6 October 2018 because taxpayers have until six months after the end of the year of assessment in which to notify HMRC of their chargeability to tax which means the cut-off date for such notification is 5 October.
 
“Practitioners have perhaps been overly focused with the Requirement to Correct (“RTC”) and Failure to Correct (“FTC”) rules and overlooked earlier legislation in 2016 which brought in a new strict liability criminal offence for offshore tax evasion.
 
“A preoccupation with the Requirement to Correct (RTC) rules is entirely understandable as the sanctions for failing to correct any inaccuracies in an individual’s tax affairs in relation to offshore matters by the 30 September 2018 deadline are severe; with penalties of up to 300 per cent of the tax involved and a minimum penalty of 100 per cent of the tax evaded.  In addition, despite the drive to increase prosecutions it is likely that the majority of cases will still be dealt with on a civil basis so will involve the imposition of penalties.
 
“It is not surprising that the earliest date that an offence can be committed coincides closely with both the deadline for the RTC and the first full automatic exchange of information by over a 100 countries under the Common Reporting Standard (CRS) on 30 September 2018.  The huge increase in information that CRS will deliver to HMRC will enable them to escalate their drive to stamp out offshore tax evasion.
 
“Those with any doubt that their offshore tax affairs are all in order should without further hesitation ask their advisers to undertake a ‘health check’ to ensure that they not exposed to the sanctions associated with non-compliance.”
 

Latest News

Raymond James Investment Management plans to launch an ETF product platform in 2025 to support strong client demand in alignment..
Aniket Ullal, Director of ETF Data and Research at CFRA Research, has written a note looking at ETFs with exposure..
Tradeweb reports the following data derived from trading activity on the Tradeweb Markets institutional European- and US-listed ETF platforms...
iShares writes that its assets under management have reached USD4 trillion. The firm says this comes off the back of..

Related Articles

Kelli Keough, SoFi
Fintech company, SoFi, launched in 2011, initially offering student-loan refinancing, then expanding into personal loans, mortgages, credit cards, banking services,...
Chris Lo, Columbia Threadneedle
In a recent insight on India by Columbia Threadneedle Investments, the firm reports that the country’s economic reforms, which aim...
With an election on the horizon in the United States a group of ETFs is poised to capture investments on...
Robot worker
Qraft Technologies, based in South Korea, specialises in the use of AI in security selection and portfolio construction....
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by