News In Focus
"Last chance" for offshore tax evaders to beat tougher regime: HMRC
A new online disclosure facility has been launched by HM Revenue & Customs to offer a "last chance" for offshore tax evaders to come forward and settle tax on their hidden wealth, before new data sharing arrangements and tougher penalties bcome available to the tax collectiong body.
Announced in the 2015 Budget, the Worldwide Disclosure Facility (WDF) is the route for taxpayers to make the required correction for their offshore tax interests and pay outstanding tax on undeclared offshore money or assets.
The WDF offers no special terms: those who come forward will pay the tax in full, with interest on top, plus a minimum penalty of 30% of the tax due for evaders, and they could still face criminal prosecution. However the quality of the information disclosed will be taken into consideration and HMRC says it is always advisable to come forward and ensure any outstanding tax liabilities are in order as soon as possible.
From now on, HMRC will also consider how long it has taken for someone to put their tax affairs in order when calculating penalties. This means that those who have delayed disclosing or ignored past opportunities will no longer get a reduction for disclosure.
Things are about to become even more difficult for evaders. Those who do not come forward now will face the new Requirement To Correct (RTC) penalties being consulted on; one option being considered is a minimum 100% penalty.
HMRC will also start to receive an unprecedented amount of data on offshore accounts, which will be added to the offshore data already received year-on-year that is used to help settle hundreds of criminal investigations. Information on financial investments held offshore will be sent automatically under the Common Reporting Standards (CRS). By September 2018, more than 100 jurisdictions will be sharing this information with the UK under CRS, which comes into force in 2017 and is fully adopted by October 2018. The CRS provides HMRC with taxpayer information from tax authorities around the world, enabling it to better target tax evaders.
Jennie Granger, Director General of Enforcement and Compliance at HMRC, commented: “We’ve closed old disclosure facilities, increased penalties, and ramped up our powers to tackle evaders and those that help others evade. Alongside this, international cooperation through global tax transparency is making it easier for us to catch evaders, as we increasingly receive more information about financial assets which people had hoped would remain hidden. Our message couldn’t be clearer: there are no safe havens left for tax evaders and no-one should be in any doubt that the days of hiding money offshore with impunity are gone.”
Since 2010, HMRC has raised over £2.4bn from offshore evasion initiatives, including more than 10,000 disclosures. More than 90 individuals are currently under criminal investigation by HMRC for offshore offences with a total fraud value in excess of £748m. These include 44 individuals acting as professional enablers such as scheme architects and promoters, chartered accountants, Independent Financial Advisors, solicitors and chartered surveyors.
Click here for HMRC's updated Compliance Handbook.