The Revenue has set a deadline of April 6th for people to declare untaxed foreign assets, after which a new penalty regime will be in place.
Under the new system, the size of fines will be linked to the tax transparency of the jurisdiction in which assets are held. The highest penalties will be linked to offshore tax evasion in countries that do not automatically share tax information with the UK.
David Gauke, Exchequer Secretary to the Treasury, said: “Time is running out for anyone going offshore to evade tax. Get your tax affairs in order or face the risk of a penalty worth up to 200 percent of the tax evaded.”
Dave Hartnett, Permanent Secretary for Tax at HMRC, added: “We have made significant progress tackling international tax evasion and closing in on tax havens in recent years. This is the next step in increasing the deterrent against offshore non-compliance – and those who decide to take the risk will feel the full force of HMRC’s new penalties.”
The new penalties for income tax and capital gains tax non-compliance classify territories into three groups, which determine what level of penalty will apply for non-compliance (see table below).
HMRC is currently running an offshore tax amnesty, the Liechtenstein Disclosure Facility, which closes in 2015 and allows people – except in certain circumstances – to transfer money to Liechtenstein in order to make use of it and disclose offshore income and gains. By doing so, evaders will suffer lower penalties and fines than if they are caught through HMRC investigations.
Transparency of territory
||The penalty will be the same as now – up to 100 per cent of tax|
||The penalty will be 1.5 times that due under existing rules – up to 150 per cent of tax|
||The penalty will be double that due under the existing rules – up to 200 per cent of tax|