The introduction of a new criminal offence for offshore evaders may be HM Revenue & Customs' ("HMRC’s") most severe punitive measure yet and things are only set to get worse.
Recent years have seen HMRC implement increasingly punitive measures against those evading UK tax, particularly when in relation to offshore assets. Following the initial consultation held in July 2015, the new legislation (Sections 106B, 106C and 106D of the Taxes Management Act 1970) finally came into force on 7 October 2017.
Claims of carelessness or innocent error will not be considered a valid defence for those found guilty under the new criminal offence of evading tax in relation to offshore assets.
Isobel Clift, senior manager at Blick Rothenberg, said: 'This is a criminal offence and more importantly is also a strict liability offence, meaning that there will be no requirement to prove intent where individuals fail to notify HMRC of an offshore liability.
'The new legislation represents a significant shift as it negates any arguments for carelessness or innocent error, and is another step forward in HMRC’s ongoing war against offshore tax evasion.'
She added: 'Things are only set to get worse for those yet to bring their UK tax affairs up to date as next September will see the window close for the Requirement to Correct, and the penalties for those who have not fully disclosed their offshore assets could be in excess of 200% of any additional tax due.'
The offence will apply for the 2017/18 tax year onwards where the tax underpaid is in excess of £25,000 (although this threshold amount is yet to be confirmed) – no offence can be committed until 6 October 2018.
For more information please contact Isobel Clift.