Under the proposals announced by HM Revenue & Customs (HMRC), those who do not volunteer to pay outstanding taxes from offshore investments and accounts could be slapped with penalties up to three times the tax they were trying to evade.
The rules have been announced just a few months before a slew of information on offshore activities is due to come into HMRC's hands, while its Worldwide Disclosure Facility (WDF), which will offer a chance for those with tax outstanding to come forward and put their affairs in order, is due to open in less than a fortnight.
"From October we will start to receive data on the offshore finances of UK taxpayers," explained financial secretary to the Treasury Jane Ellison. "This is a game changer in the fight against evasion and it's time for anyone who is evading tax to do the right thing and pay what they owe."
Jennie Granger, director general of enforcement and compliance for HMRC, added:
We are determinedly tackling this. We will find those who think they can dodge paying tax in this country. We've closed old disclosure facilities, increased penalties, and ramped up our powers to tackle evaders and those that help others evade – the days of any safe havens for tax evaders are numbered.
Commenting on the proposals, Craig Hughes, tax director at accountancy firm Menzies, said:
While the government's drive to tackle offshore tax evasion is understandable, it is important to remember that the vast majority of people who structure their affairs offshore do so for many legitimate reasons.
The government must take care not to tar legitimate taxpayers with the same brush as those who are corrupt and seek to launder or hide illicit funds through offshore accounts.
The proposals' announcement coincides with the launch of a consultation on the requirement for those with outstanding tax liabilities from offshore interests to voluntarily pay up by September 2018. The consultation will be open for submissions until 19 October.
"Following the termination of offshore disclosure facilities last year, this is the final chance for taxpayers to come forward to correct their outstanding tax liabilities before September 2018, after which the taxpayer will be subject to a new, tougher set of sanctions," explained Withers' special counsel Tessa Lorimer. "Although the penalties proposed are harsh from a historic perspective, taxpayers should not expect to get a better deal in future."
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