Stashing cash abroad? Go straight to jail and do not pass Go
Last week Chancellor George Osborne announced that the government is to consult on a new criminal standard for those who secrete their money overseas to avoid paying tax in the UK.
Under the proposals HMRC would simply have to demonstrate that undeclared income was taxable to initiate a criminal prosecution rather than proving that it was the individual’s intention to evade tax, as is the case currently.
Under current rules, offshore tax evaders can face penalties equivalent to double the tax owed and criminal prosecution with the possibility of a custodial sentence. Should the government get their way then prison sentences would be increased as well as more punitive fines.
Incentives in the form of financial rewards could be offered to whistleblowers who assist in uncovering untaxed assets placed offshore, sounding as though the government has taken its lead from the Canadian model.
Speaking of the proposals, Mr Obsborne said:
“We’ve already done a lot to crack down on those who don’t pay their taxes, now we’re introducing a new criminal offence for people who hide their money offshore.
And the message is very simple – if you’re hiding money offshore, we are coming to get you and the criminal law is going to come and find you.”
As much as tax evaders should be brought to task, giving HMRC more sweeping powers to criminally convict a taxpayer at will sets dangerous precedents. Only last month HMRC were given licence to raid the bank accounts of those people that fell into tax arrears and where the department had made repeated but unsuccessful attempts to collect the debt. The Revenue already has enough powers without turning them into a mini police state terrorising the taxpaying community.
I am in agreement with Bill Dodwell, head of tax at Deloitte, who told the Times newspaper:
“People should not be put in prison unless you can prove intent.
I’m shocked to find that an offence which could lead to a prison sentence could be decided on a strictly liability basis.
If this charge applies to all evasion cases I think that’s unacceptable.”
It maybe that there is little intention to use such prosecution powers but rather as a device to scare evaders into owning up.
These proposals appear to be a reaction to the lack of success HMRC have had following the deal brokered between the UK and Swiss governments in 2011, from which the Chancellor forecasted a windfall of £3 billion but last year only raised £800 million.
I move money overseas as I can get a much better return on my capital as fund managers and banks there don’t get most of the gain and leave the investor with next to nothing as reward. I am sick of the model of paying fund managers and banks win or loose. However I have no intention of avoiding paying taxes.
If HMRC and the government were more interested in fairness they would ensure income can be gained from the best performing sources wherever that might be and penalise the parasitic fund managers and banks instead. The rules must change so that owners of equity are not pillaged by all and sundry in the financial services sector and government. People who have saved all their lives are ripped off under the present system including by the government and they then want to tax the meagre income as well! Come on, get off the grass.
Yet another smokescreen.
This makes it look as they they are going after corporations based abroad.
The reality is if you have made money in this country paid your tax on it and then invest in overseas interests you will be chased for more tax.
If you are a multi-national corporation that pays no tax at all you will still be quite safe.
The £3billion or so they claim this will recover is dwarfed by the estimated £40 billion or so avoided by major coporations through loopholes, no sign of them being closed in the near future ??
Agree with #bookmanwales. If a corporation, limited company, LLP, hedge fund or other financial entity or individual earns money in the UK, that money should be taxed in the UK. There are too many legal vehicles for moving money off shore and to avoid UK tax. The present (and current opposition) government has far too many business friends (i.e. donors /interests / revolving-door accountancy companies) to do anything more than make superficial gestures towards a fair tax policy.
#1 PeterW point is well made also. UK personal debt is one of the highest in Europe. There is no incentive to save even if there is enough left at the end of the month to put something away. Take the wait out of wanting (Barclaycard) seems to be the vision of the present lot to solve all our economic woes. Will no political party have the guts to act on tax and savings in a fair way that benefits the majority – including the many small businesses – rather than a greedy minority, and damn the consequences?