HMRC is stepping up efforts to tackle offshore tax evasion in its updated strategy document ‘No safe havens 2014’. The paper proposes the introduction of a new criminal offence for failing to declare taxable offshore income, a conviction to be introduced in 2015 (subject to consultation).
In recent years HMRC has been taking a tougher stance on tax evasion, and has introduced numerous campaigns to encourage the declaration of undeclared income and gains. With the imminent adoption of the new ‘global standard of automatic exchange of tax information’, taken together with existing agreements already in place between the UK and certain overseas jurisdictions, HMRC will soon have more information than it has ever had regarding offshore assets belonging to UK residents.
Forty-four jurisdictions so far have committed to the early adoption of the new global standard, and will shortly be sharing information on financial accounts. If you have an offshore account in one of these jurisdictions, HMRC will be able to see details such as your name, address, account balance and your income.
Ahead of the introduction of new information sharing agreements, HMRC is currently running disclosure facilities for people with offshore investments, to give people a limited opportunity to voluntarily clean up their tax affairs. If you are eligible, now is the time to consider using one of these facilities to mitigate any penalties due, before the opportunities close in 2016. If HMRC challenge you first, you will not qualify for penalties at the lowest rate, could find your name on a published list of tax evaders and face criminal prosecution.
If the proposed new criminal offence for failing to declare taxable offshore income becomes law, HMRC will only be required to demonstrate that foreign income was taxable and not declared, for a prosecution to be possible. It will no longer be necessary for HMRC to prove that the intention was to evade tax.
If you are in any doubt about whether or not you have any sources of offshore taxable income, contact our Tax Experts on 0845 177 5500 or use our on-line contact form for a free initial consultation.