As a new year dawned, the likes of accountants, bankers, lawyers and other advisors who enable offshore tax evasion entered it with the prospect of tough new sanctions; designed to create a level playing field for the majority of people and businesses who play by the rules.
New powers, originally announced at Budget 2015 and introduced in Finance Bill 2016, will see individuals or companies who take deliberate action to help others evade tax hit with fines of up to 100% of the tax they helped evade or £3,000, whichever is the greater. In addition, the taxman will also be able to publicly name and shame the enabler.
Although tax evasion has always been illegal, these new measures will enable HMRC, for the first time, to charge civil penalties on those who facilitate tax evasion and who provide planning, advice or other professional services or physically move funds offshore.
The UK is one of the first countries in the world to introduce this power and Financial Secretary to the Treasury, Jane Ellison commented:
“Tax evasion is a crime and as a government we have led reform of the international tax system to root it out.
Closer to home we are creating a tax system where taxes are fair, competitive and paid.
The raft of measures we have introduced to tackle avoidance and evasion will create a level playing field for the vast majority of people and businesses who play fair and pay what is due.”
This year will also see the introduction of a new corporate criminal offence of failing to prevent the facilitation of tax evasion. New rules currently being legislated for, will hold companies liable if an individual acting on its behalf as an employee or contractor facilitates tax evasion. Previously there needed to be proof that the board of directors were aware and involved in facilitating tax evasion.
Running in parallel to these new measures is the requirement for a person to correct historically evaded taxes by 30th September 2018, as failure to do so will see them heavily penalised. There will also be a consultation on a new requirement for businesses and individuals who create complex financial arrangements that bear the hallmarks of enabling tax evasion to notify them to HMRC.