New proposals to fight tax evasion

Written By Unknown on Sabtu, 12 April 2014 | 19.12

12 April 2014 Last updated at 12:08

People who hide their money overseas to avoid paying tax face bigger fines and could be jailed more easily under government plans to fight tax evasion.

To prosecute at present, tax officials must prove a person holding income offshore has intended to evade tax.

But under a new criminal standard officials would only have to show money was taxable and undeclared.

Chancellor George Osborne said the changes would mean there was "no safe haven" for those evading tax.

But Labour's shadow exchequer secretary to the Treasury said the government was "failing to tackle tax avoidance and evasion".

A consultation will be held to let the public have their say on the plans.

Whistleblowers' bonus

In recent months, the UK has joined other G20 countries in focussing on moves to share information about tax evasion.

Now Mr Osborne says the government will consult on a new criminal standard, harsher fines and increased jail sentences.

At present, offshore tax evaders can be fined twice the amount they owe, and can face criminal prosecution and a possible prison sentence.

The government will look at options to increase these penalties, as well as the possibility of financial rewards for whistleblowers who "help uncover" untaxed offshore assets.

Mr Osborne, who is in Washington DC for the spring meeting of the International Monetary Fund and World Bank, told the Financial Times: "We are changing the balance of the law so the burden of proof falls on those who are hiding their money offshore and we don't have to prove that they intended to do so.

"It is totally unacceptable for people not to pay the tax that is due and the message will be clear now with this new criminal offence that if you're evading tax offshore, there is no safe haven and we will find you."

Bill Dodwell, head of tax at Deloitte, told The Times that the plans were "horrifying".

"People should not be put in prison unless you can prove intent," he said.

"I'm shocked to find that an offence which could lead to a prison sentence could be decided on a strict-liability basis.

"If this change applies to all evasion cases I think that's unacceptable."

'Prodigal son policy'

Ray McCann, tax partner at the law firm Pinsent Masons, told BBC Radio 4's Today: "I think what we'd probably be seeing here would be a sort of lower level criminal offence, largely intended to give further encouragement to those who have been evading tax to come forward.

"I would be surprised if we see an increased number of people ending up in the dock and very surprised if any of them were being sent to prison as a result."

Bob Rothenberg, senior partner at Blick Rothenberg chartered accountants, said he believed the government wanted to frighten people people into owning up, rather than prosecute them.

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I would be surprised if we see an increased number of people ending up in the dock "

End Quote Ray McCann Pinsent Masons

"That certainly has been the objective that they've followed up to now, with their various... so-called amnesties," he said.

"And I think that they are thinking that they may get a greater number of people coming forward if the threat of criminal prosecution is there."

Mr McCann added: "The over-arching difficulty that the Revenue have got is that for about 100 years in this country, we've operated a sort of prodigal son policy.

"So if someone who has got hidden assets decides to come clean and march into the local tax office, put their hands up and confess all, then the public policy put forward by the government in this country was not to prosecute them.

"And that policy is still in place."

Shabana Mahmood, Labour's shadow exchequer secretary, said: "For all the tough talk, this government is failing to tackle tax avoidance and evasion.

"The amount of uncollected tax rose last year and the Chancellor's Swiss tax deal has raised less than a quarter of the revenues promised.

"At a time when families are facing a cost-of-living crisis and the deficit is still high, this simply isn't good enough."

Chancellor George Osborne predicted a tax deal struck between the British and Swiss governments in 2011 would recover about £3bn in previously unpaid taxes in 2013.

Figures showed about £800m was collected last year, about a quarter of the forecasted amount.

BBC business reporter Michelle Fleury said that finance leaders from the world's 20 leading economies had been ramping up their fight against tax evasion.

Prime Minister David Cameron made tax a key issue during Britain's presidency of the G8 last year.

More than £1.5bn has been recovered from offshore tax evaders over the past two years, according to HM Revenue & Customs.


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