Taxman steps up the pressure on offshore evaders

Taxman steps up the pressure on offshore evaders

The crackdown on offshore tax evasion intensified today as HMRC published two consultation documents

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The crackdown on offshore tax evasion intensified today as HMRC published two consultation documents dealing with (1) A new criminal offence and (2) Strengthening civil deterrents, according to KPMG in the UK. 

Commenting on the proposals, Derek Scott, head of personal tax investigations at KPMG in the UK said: “These are important consultation papers which significantly develop the offshore evasion arena. Added to this, HMRC will also be in receipt of increasing amounts of information from many countries as a result of international cooperation agreements.  Anyone taking the view they are out of sight and will not be discovered should think again or face up to the possible financial and/or criminal sanctions that could be awaiting them.

“Whilst there are an increasing number of people prosecuted for tax evasion, it is important to remember that the vast majority of cases continue to be concluded by HMRC for a civil financial settlement. We would fully expect this to continue for those who are coming forward to put matters straight.

“Clearly there is no substitute for ensuring all your tax affairs are in order. HMRC disclosure facilities which offer unique terms expire in 2016, so the need for action has never been more important."

In the criminal offence consultation it is proposed there should be a new strict liability criminal offence of failing to declare taxable income and gains arising offshore regardless of the intention to evade tax. This will apply to income tax and capital gains tax but not, at this time, to other taxes such as inheritance tax.

To reflect the “OECD Common Reporting Standard (CRS)” whereby offshore account details for UK persons will be exchanged with the UK on an automatic basis, the consultation sets out that it is the Government’s preference to exempt all income and gains arising in CRS jurisdictions from the new offence.

In the civil deterrents consultation there are several proposals including:

Extending the current civil penalty regime for offshore non compliance from Income Tax and Capital Gains Tax arising offshore to also include Inheritance Tax where the assets are located offshore.

Extending the current civil penalty regime to include income and gains that originally arose in the UK but where the proceeds were moved to an offshore account.

Introducing an additional surcharge (or possibly extending the 20 year assessment time limit) for those who have deliberately moved assets between different offshore jurisdictions to escape greater tax transparency developments.

Introducing a new penalty category for those who hold assets in jurisdictions which do not exchange information with the UK to a penalty rate of more than the current 200%.

HMRC has a number of disclosure facilities available through which taxpayers are able to officially inform the tax authorities of offshore assets and settle outstanding tax. Details are on the HMRC website.

KPMG has a telephone helpline for people seeking advice on offshore tax issues which is 0800 970 9690.


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For further information please contact:

Margot Cowhig, KPMG Corporate Communications

T: +44 (0)207 694 4246

M: +44 (0)7920 274 856


KPMG Press Office: +44 (0)207 694 8773


About KPMG

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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