Government plans new tax crackdown on offshore assets

People could face tax investigations and even criminal prosecution if they fail to declare and pay offshore tax liabilities under government proposals.

A new criminal offence of failing to declare taxable offshore income and gains has been set out in an HM Revenue & Customs (HMRC) consultation paper published on 19 August. The consultation, which closes on 31 October, seeks views on the design of the new offence and on appropriate safeguards.

Most offshore cases will continue to be dealt with through a civil approach and another consultation paper clarifies the government’s plans to introduce tougher civil sanctions, including for people who move taxable assets between offshore banks in different countries in an attempt to hide wealth and evade tax.

The consultation examines the situation where an individual moves their assets from one offshore centre which has tightened its tax information-sharing laws to another that has not. The 20-year rule limiting how far back HMRC can look at a taxpayer’s affairs could also be suspended.

David Gauke, Financial Secretary to the Treasury, said: “There is nothing wrong with holding assets offshore but investors must pay the tax they owe here. Over 56,000 people have already told HMRC about what they owe offshore and HMRC has offered opportunities to clear things up as quickly and easily as possible. Those that don’t come forward must face tough consequences, including a criminal conviction.”

With the government and HMRC committed to closing the UK tax gap – the difference between tax owed and tax collected – the range of tax crackdowns and tax investigations is likely to continue to grow. In the event of a tax investigation, working with the experts at Taxation-Investigation can help to clarify the taxpayer’s position and identify their options.

We’ll provide constructive advice and support, enabling taxpayers to focus on their day-to-day affairs while we liaise with HMRC inspectors to bring the investigation to a satisfactory conclusion. Where tax affairs are in order, we will argue the case robustly and we will also negotiate any settlement necessary with a view to minimising HMRC claims for any tax and penalties.