UK Treasury Steps up Tax Evasion Crackdown
Seven weeks ahead of the May 7 general election, the UK government has announced plans to create a new offence that would see companies charged for failure to prevent tax evasion.
As part of the Treasury’s efforts to expose secret offshore accounts, the new proposals also include creating a criminal office for individuals who fail to pay tax on offshore income, regardless of their intentions.
“It will no longer be possible to evade large sums of tax and plead ignorance in an attempt to avoid criminal prosecution,” the government announced. However, it promised that there would be consultation on “appropriate defences and thresholds” before the measure was introduced.
The proposal to create a “strict liability” offence of offshore tax evasion – enabling an individual to be prosecuted regardless of whether there was evidence of an intention to break the law – was initially proposed last year. At the time it was heavily criticised by the Law Society, which argued that it was likely to breach the principle of the right to a fair trial. While many tax professionals expected the government to drop the measure, it has instead been revived following the recent HSBC Swiss banking row.
Chancellor George Osborne said that the new powers would ensure that individuals paid a “fair contribution”.
The government also intends to strengthen the range of penalties that HM Revenue & Customs (HMRC) is able to apply, including a new penalty that would take a portion of any asset that has been hidden. HMRC will also have increased resources to pay rewards for information on offshore tax evasion.