HMRC warns tax dodgers of higher penalties
HMRC has warned taxpayers with overseas assets that they risk higher penalties
The Revenue said that tougher penalties will take effect from October this year, so those with overseas assets need to “put their cards on the table” quickly or risk bigger fines.
“Everyone has to pay their tax and the vast majority of people and businesses already do. It’s on their behalf that we are cracking down on offshore tax cheats,” said David Richardson, HMRC’s director general for customer strategy and tax design.
The crackdown is part of the government’s plans to clamp down on safe havens used by taxpayers to avoid paying tax.
The firm Blick Rothenberg said tax dodgers should take HMRC’s warning to correct any irregularities or face serious penalties seriously.
Tax partner Gary Gardner said, “It would be a very regrettable and expensive mistake to hope that this is just more ‘empty talk’ as HMRC have made it clear they will prosecute the most serious cases of tax evasion.
“Given criticism from both the National Audit Office and the Public Accounts Committee that HMRC are not doing anywhere near enough to combat evasion and avoidance by high net worth individuals the pressure on HMRC to crack down on overseas evasion and avoidance using civil and criminal sanctions is greater than it has ever been.”
The penalties for failing to correct any errors or omissions relating to offshore interests will attract a penalty of up to 300% of the unreported tax shown to be due, the firm explained.
Moreover, a further asset-based penalty will be applied of 10% of the asset value where it becomes clear the taxpayer was aware by the end of the 2016/17 tax year that they had offshore non-compliance to correct.
Blick Rothenberg said the fact that HMRC had allowed itself more time to investigate such cases by extending the time limit for making an assessment to tax by four years (to a minimum of 12 years) should ring alarm bells.
“This will provide adequate time for HMRC to analyse the vast volume of financial data which will be automatically exchanged by over 104 countries so the more serious cases can be identified and either investigated criminally or investigated civilly under the procedures for the civil investigation of serious fraud,” Gardner explained.
“In stark contrast those impacted and their advisers have just over six months to review what may complex affairs going back many years.”
HMRC said people might not realise that they must declare their overseas income to HMRC if they have worked overseas or are receiving income from a rental property outside the UK. These taxpayers are being encouraged to check the new guidelines before the tougher penalties come into effect.
Originally published in Economia on 8 March 2018.