APRIL 2018 — LEEDS. HMRC, Britain’s tax collection service, has announced plans to increase pressure on offshore tax dodgers. Her Majesty’s Revenue and Customs intend to provide financial prosecutors with new investigatory powers and the ability to hand out harsher penalties to all those caught operating offshore tax avoidance schemes.
Russell Smith, Director of British-based finance firm RS Accountants, advises that these are not just empty threats: “With recent surges in public tax-dodging cases, such as the Panama Papers, governments are under pressure to prosecute wealthy individuals and businesses avoiding proper taxation.”
In an official announcement, HMRC revealed these new powers are to become enforceable on October 1st, 2018. The financial authority will be capable of levying fines up to 300% of any unpaid taxes, plus a second penalty that equates to 10% of total offshore asset value. They will also publicly name and shame convicted parties. It must be noted that ownership of offshore assets is not illegal, but they must be declared on tax returns with appropriate fees paid to HMRC. The illegal practice occurs when offshore accounts are not disclosed properly and instead hidden to avoid payment of foreign-income tax.
HMRC’s warning comes as a reminder of British Prime Minister Theresa May’s commitment to stamping out tax evasion. In 2016, she issued a statement letting offshore account holders avoiding tax know that the government was ‘coming after you’.
“Public spending budgets are under strain. HMRC needs to fuel the economy, and one avenue it plans to chase aggressively is catching out wealthy tax-dodgers and ensuring they contribute what they should. These aren’t just words. These are real threats. They will catch you.” Smith warns. “The state already collects a massive amount of data on offshore assets, remaining vigilant for signs of illegal tax avoidance schemes. If you are discovered, they already have the power to cause serious damage. When the new measures are enforced, this damage will only be amplified. Failure to take this new commitment to catching tax avoidance seriously would be a massive oversight. HMRC advises that now is time to lay your cards on the table and be honest about offshore assets. If you have offshore assets, now more than ever, you must ensure you are declaring them properly.”