Offshore tax evasion: Osborne sets out new penalties


George Osborne: "If you are hiding your money offshore, we are coming to get you"

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People who hide their money overseas to avoid paying tax face bigger fines and could be jailed more easily under government plans to fight tax evasion.

To prosecute at present, tax officials must prove a person holding income offshore has intended to evade tax.

But under a new criminal standard officials would only have to show money was taxable and undeclared.

Chancellor George Osborne said the changes would mean there was "no safe haven" for those evading tax.

But Labour said the government was "failing to tackle tax avoidance and evasion".

A consultation will be held to let the public have their say on the plans.

Whistleblowers' bonus

In recent months, the UK has joined other G20 countries in focusing on moves to share information about tax evasion.

Now, Mr Osborne says the government will consult on a new criminal standard, harsher fines and increased jail sentences.

At present, offshore tax evaders can be fined twice the amount they owe, and can face criminal prosecution and a possible prison sentence.

The government will look at options to increase these penalties, as well as the possibility of financial rewards for whistleblowers who "help uncover" untaxed offshore assets.

Mr Osborne, who is in Washington DC for the spring meeting of the International Monetary Fund and World Bank, said: "A very important part of our economic plan is that everyone makes a fair contribution.

"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 your money offshore, we are coming to get you and the criminal law is going to come and find you."

Joe Lynam reports: ''The government wants to tilt the law in favour of the taxman and against secretive millionaires''

Bill Dodwell, head of tax at Deloitte, told the Times newspaper the plans were "horrifying".

"People should not be put in prison unless you can prove intent," he said.

"I'm shocked to find that an offence which could lead to a prison sentence could be decided on a strict-liability basis.

"If this change applies to all evasion cases I think that's unacceptable."

'Prodigal son policy'

Ray McCann, tax partner at the law firm Pinsent Masons, said: "I think what we'd probably be seeing here would be a sort of lower level criminal offence, largely intended to give further encouragement to those who have been evading tax to come forward.

"I would be surprised if we see an increased number of people ending up in the dock and very surprised if any of them were being sent to prison as a result."

Bob Rothenberg, senior partner at Blick Rothenberg chartered accountants, said he believed the government wanted to frighten people people into owning up, rather than prosecute them.

Start Quote

At a time when families are facing a cost-of-living crisis and the deficit is still high, this simply isn't good enough”

End Quote Shabana Mahmood Shadow exchequer secretary

"That certainly has been the objective that they've followed up to now, with their various... so-called amnesties," he said.

"And I think that they are thinking that they may get a greater number of people coming forward if the threat of criminal prosecution is there."

Mr McCann added: "The over-arching difficulty that the Revenue have got is that for about 100 years in this country, we've operated a sort of prodigal son policy.

"So if someone who has got hidden assets decides to come clean and march into the local tax office, put their hands up and confess all, then the public policy put forward by the government in this country was not to prosecute them.

"And that policy is still in place."

Mr Osborne predicted a tax deal struck between the British and Swiss governments in 2011 would recover about £3bn in previously unpaid taxes in 2013. Figures showed about £800m was collected last year.

Shadow exchequer secretary Shabana Mahmood said: "For all the tough talk, this government is failing to tackle tax avoidance and evasion.

"The amount of uncollected tax rose last year and the chancellor's Swiss tax deal has raised less than a quarter of the revenues promised.

"At a time when families are facing a cost-of-living crisis and the deficit is still high, this simply isn't good enough."

BBC business reporter Michelle Fleury said finance leaders from the world's 20 leading economies had been ramping up their fight against tax evasion.

Prime Minister David Cameron made tax a key issue during Britain's presidency of the G8 last year.

More than £1.5bn has been recovered from offshore tax evaders over the past two years, according to HM Revenue & Customs.


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  • rate this

    Comment number 1021.

    And how many of those expressing their sanctimonious views on how the rich avoid paying taxes have paid cash to plumbers, brickies and the black economy in general in order to "get a bit of work on the cheap guff" no VAT, nudge nudge wink wink. Reality still remains that as the tax thresholds rise the rich will continue to pay the vast majority of taxes raised.

  • rate this

    Comment number 898.

    A friend of mine who is an accountant says that it would in fact be very easy to clamp down on tax evasion and avoidance. Just pass a law saying that if the main purpose of any activity/scheme would reasonably be said to be to avoid tax then it is illegal. Why not just do this?

  • rate this

    Comment number 895.

    FIX the tax system and stop the opportunities to not pay tax. If the opportunity exists it will be used by those who know how to use it.

    The richer one is the more incentive to pay those who know how to pay less. Those who know how are from those who designed the system and its condoned by the treasury. The less rich have to PAYE

  • rate this

    Comment number 881.

    We can close all the loopholes and make new laws as much as we like.

    It won't change a thing.

    The mega wealthy and corporations will still keep the hard working majority on low wages and lower the wages of those that aren't there already.

    Until something is done about the wealth gap, not just tax avoidance, the world cannot and will not move forwards.

  • rate this

    Comment number 799.

    Middle earners are paying too much tax being dragged into the 40% bracket. Plus, the majority are on PAYE so pay the full whack on NI too.

    As for tax evasion it's a loss leader simply because, as others have pointed out, the best brains at HMRC are head-hunted to the big accountancy companies thus providing insider information on the next tax wheeze.


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