UK clamping down on tax evasion
New regime with increased civil and criminal penalties in the pipeline.
The UK Government is committed to clamping down on tax evasion through the use of overseas tax havens. It plans to introduce and broaden civil and criminal penalties to increase the severity of punishments for enablers and evaders, as well as the corporations that fail to prevent evasion.
In July 2015 the UK Government announced a new regime to crack down on offshore tax evaders and has been consulting on some of the key issues involved in tackling the problem. As a result of these consultations, which ran until October 2015, offshore tax evaders and the professionals who enable such evasion will face even tougher sanctions. The Government has published draft legislation and will run another consultation in early 2016 to finalise this legislation.
Four earlier consultations, leading up to draft legislation issued on 9 December 2015, looked at the following:
1. A new criminal offence for offshore evaders to enable simpler prosecution.
2. A new criminal offence for corporates who fail to prevent the facilitation of tax evasion.
3. Strengthening civil deterrents and increasing financial penalties for evaders.
4. New and broadened civil sanctions for deliberate enablers of offshore evasion in relation to income tax, capital gains tax and inheritance tax. Among those who could be caught by this are those who act as a middleman, provide planning advice, deliver the infrastructure or give financial assistance.
Despite the increasing firmness of the Government’s approach, as highlighted by these consultations, HMRC is keen to stress that taxpayers have been given plenty of opportunity to regularise their affairs.
In preparation for the automatic exchange of taxpayer information between 90 countries from 2017 onwards, the UK Government is giving tax evaders a last opportunity for disclosure. If people do not take this opportunity, there will be tougher criminal and civil sanctions for evaders as well as a strengthening of the approach for corporates and enablers. It appears that the Government is sending its clearest message yet that they are closing in on offshore evaders, in the hope that over the long term it will create a culture of increased compliance.
For further information, contact:
Rajesh Sharma Smith & Williamson, UK
T: +44 (0)20 7131 4181
T: +44 (0)20 7131 4393