HM Treasury has today released a document outlining actions to tackle tax evasion and avoidance. Much of the detail focuses on legislation already implemented by the current Government but it also contains a raft of new measures.
“Much of what is contained in the document involves extending existing initiatives such as increasing penalties for offshore evaders and issuing new accelerated payment notices. However, there are two new notable announcements involving new consultation:
“The first of these looks to impose civil penalties on enablers of tax evasion. This would carry a penalty equal to the fine paid by the individual who has been helped to evade the tax. There are already criminal offences of facilitating or encouraging tax evasion but this can be very difficult to prove in court. As this new measure is civil rather than criminal it means that the burden of proof will on be on the balance of probability making conviction easier.
“The second package of measures is aimed at corporates which fail to “prevent tax evasion or the facilitation of tax evasion.” This would apply where for example a bank fails to have adequate controls in place to stop members of staff aiding clients to evade tax. Therefore, it appears to be similar to current rules under the anti-bribery act, which require companies to have procedures in place preventing staff from giving bribes. While not stated, we would assume that the rule would apply to partnerships and any other form of association, not just corporates.
“What is less clear, however, is whether the new rules will also oblige organisations to take measures to actively prevent their clients evading tax. If so, just what amount of supervision of client activity would be required to avoid liability? Such a rule might impose an unworkable administrative burden on corporates.
“Finally, following earlier consultation, the Government will introduce a strict liability criminal offence for those who have not paid tax on offshore income. This will stop offshore evaders claiming, for example, they didn’t understand the rules. However, it is to be hoped that there will be a defence for somebody who can demonstrate that they took adequate advice and a mistake was genuine.
“Overall though, this a further step down the path to reduce opportunities and increase consequences for those who evade tax and for those that help them.”
Jessica Liebmann, KPMG Corporate Communications
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