The plans, and an announcement of an intention to launch a consultation on the matter imminently, are contained in an update to an earlier tax evasion crackdown strategy document published last year.
In an introduction to the update, which was published today, Treasury minister David Gauke announces the Government's intention of introducing "a new strict liability criminal offence that could mean jail for those who do not declare taxable offshore income".
Details of the planned new enforcement powers, including "the appropriate safeguards", will be unveiled later in the year, Gauke adds.
Today's publication of No Safe Havens 2014 followed the publication, in a number of UK newspapers over the weekend, of remarks made by Chancellor George Osborne during a trip to Washington in which he revealed plans to, as the Financial Times reported, "change the balance of the law so the burden of proof falls on those who are hiding their money offshore, and we don't have to prove they intended to do so".
The strategy document published today does not go as far as to say that proof of intent will no longer be required. It does say: “HMRC will increasingly regard those who still do not come clean as deliberately breaking the law. They will have no excuse and we will come down hard on them, with all the sanctions at our disposal.”
In a related development, Andrew Tyrie, chairman of the Commons Treasury committee, was reported to be planning to look into certain of the proposed extension of HM Revenue & Customs’ powers.
“We must be vigilant to ensure we don’t lose the essential balance between the powers that HMRC needs and protecting individuals,” Tyrie is quoted as saying in a page one story in the Financial Times this morning. Neither Tyrie's office nor the House of Commons press office immediately responded to a request for further information.
Tyrie's comments echoed those of many industry experts, who immediately criticised such elements of the latest scheme as the possibility that people could go to prison for tax evasion commited out of ignorance rather than intentionally.
As reported, other schemes aimed at going after tax evaders that were announced by the chancellor in his Budget last month – such as the Revenue's new ability to demand up-front payment of tax it claims it is owed, but which is in dispute, as well as its new power to help itself to money it is owed by dipping into the bank accounts of taxpayers who owe more than £1,000 – have also sparked concern and some criticism.
'Fundamental shift'
Phil Berwick, a partner and head of contentious tax at the Irwin Mitchell law firm, was among those critical of the Government's latest plans for cracking down on offshore tax evaders. That the Government would no longer be required to prove that someone with undeclared offshore assets had deliberately set out to avoid tax, he said, represented "a fundamental shift in the burden of proof".
"Not everybody who has failed to declare foreign income has done so deliberately," he added.
"There is a danger that HMRC will focus on 'soft' targets, and hardcore evaders will still evade capture or punishment. There is also the danger that the new rules will subsequently be extended to change the burden of proof in other situations."
“There is already a maximum penalty of 200% of the tax that has not been paid, in addition to interest and tax for up to 20 years, for taxpayers with undeclared foreign income.
“This latest announcement follows on from the news that HMRC will have the power to raid taxpayers’ bank accounts. Because HMRC has failed to prosecute a sufficient number of offenders, the Government is seeking to change the rules to make it easier to meet targets.
“HMRC has had a significant amount of data on offshore offenders for a long time, but has failed to pursue criminal investigations. HMRC already has sufficient powers to pursue these taxpayers.
"Where will HMRC’s quest for increased powers end?"
New global standard
The No Safe Havens update released today summarises HMRC's activities since last year's document was published in March 2013. These include the signing of "10 more automatic [information] exchange agreements"; the UK's "intention to adopt…as early as possible" the Organisation of Economic Cooperation & Development's new global standard of automatic exchange of tax information, which 44 jurisdictions are said to have committed to adopting; and the continued availability of "amnesty" disclosure facilities in Liechtenstein, the Isle of Man, Guernsey and Jersey, all of which expire in 2016.
Thus far, 56,000 people have come forward under these disclosure facilities, resulting in the collection of some £1.3bn, the document notes.
To read and download the 18-page No Safe Havens 2014 document, click here. To read and download last year's No Safe Havens: Our Offshore Evasion Strategy 2013 and Beyond, click here.
