The new rules simply say that at present a criminal offence applies only if it can be proved that income had been deliberately hidden. But under the new strict liability rules, normally reserved for offences that present a grave and immediate danger to the public – such as possession of a firearm – anyone with undeclared offshore income or capital gains can be found guilty of fraud, whatever the underlying reasons.
HMRC says it will be relentless in its pursuit of evaders.
There is no distinguishing between deliberate evasion and carelessness leading to mistakes. Tax experts describe the strict liability rule as an unnecessary change which is fraught with unfairness and inconsistency.
HMRC insist those charged can rely on having taken reasonable care with their tax affairs by having a reasonable excuse as a defence but this is not clear.
The problem we have is that someone can be found guilty of committing deliberate tax fraud following a genuine mistake.
That would impose what essentially would be a reverse burden of proof where an individual would be facing a potential custodial sentence and that can’t be reasonable.
The maximum penalty will be a prison sentence of six months and a fine of double the tax owed. The minimum threshold for pursuing evaders will be as low as £5,000.
There is still a way out under the Liechtenstein Disclosure Facility but that runs out at the end of the year. It was going to be April 2016 but it has now been brought forward to December 2015.
It is quite amazing how many people haven’t taken advantage of the LDF and after December 2015 they may quite easily be facing criminal investigation. As from next year the “last chance” disclosure facility will be available but with much higher and tougher penalties and no immunity from criminal investigation.
Also remember that from 2017 HMRC will have at its disposal more than 90 countries exchanging details of bank accounts, trusts and shelf companies under a new system of information pooling.
The information will be offshore accounts including names, addresses, account numbers, interest and balances. Information will then be fed into a powerful computer and processed.
However, there is also the HMRC let property campaign, which could be a way out for landlords with UK and overseas property, which charges a penalty of around 20%.
It is extremely important that you should seek advice from someone like KinsellaTax or a similar body to get up to date information and avoid the serious investigation which may lead to a criminal conviction, which may in turn lead to a custodial sentence.
Please avoid this – get in touch with KinsellaTax for any further information and do please, if you are able, take advantage of the LDF (Liechtenstein Disclosure Facility) due to run out 31 December 2015.