The Offshore Tax Compliance Strategy: No Safe Havens 2019 policy paper was published on Wednesday.
According to Hammond, it “sets out the direction for HMRC’s updated strategy for offshore tax compliance, bringing together the government’s response to all forms of offshore non-compliance”.
According to policy documents: “No Safe Havens 2019 builds on HMRC’s achievements so far in addressing offshore tax non-compliance and expands the scope and ambition of the previous strategy.”
Namely, beyond its key focus on offshore tax evasion.
“However, we recognise that the minority of customers who pay less offshore tax than they should, do so for a variety of reasons. Some make mistakes or attempt to avoid tax by exploiting the rules to gain an advantage parliament never intended.
“Other seek to evade tax, and in doing so commit a crime,” it added.
What will HMRC do and how?
The UK taxman outlined three overarching objectives:
- To maximise revenues and bear down on avoidance and evasion;
- Transform tax and payments for customers; and,
- Design and deliver a professional, efficient and engaged organisation.
It intends to achieve these aims by focusing on three areas:
- Leading internationally – championing international tax transparency. This includes improving international collaboration between tax authorities to ensure the correct UK tax is paid.
- Assisting compliance – helping customers get offshore tax right first time. This includes increasing customers’ awareness and understanding of their responsibilities. This also includes using new data and insights to design systems and processes to help meet everyone’s needs as we try to make tax as easy as possible.
- Responding appropriately – taking a proportionate approach to risk and behaviour. This includes helping those who make mistakes; robustly challenging those who avoid or evade tax; and applying sanctions to those who help them.
Focusing on the third area, ‘Responding appropriately’; HMRC said it will examine how else it can encourage and help customers correct inaccuracies.
The taxman said that, using insights gained from the requirement to correct legislation and elsewhere, “we will be better able to identify risks and spot possible mistakes with customers’ tax affairs as they arise”.
“Where we suspect a taxpayer may have made a mistake, we will encourage them to check their tax return is accurate.”
In 2018, HMRC wrote to tens of thousands of customers it believed may have tax due on an overseas account or investment.
Figures released by the taxman suggest that one in 10 UK taxpayer has an offshore financial interest.
Best to ‘fess up
Dawn Register, tax dispute resolution partner at BDO, commented: “A huge change is the amount of information that HMRC now receives from overseas jurisdictions. This is exchanged automatically, en masse and in many cases without the knowledge of the individual or business involved.
“The network of jurisdictions is now over 150 countries. HMRC is keen to highlight that this work will not only continue but also intensify.”
She added: “The message to both individuals and businesses is that voluntary disclosure to HMRC will always be a better option, compared to an intrusive investigation.”
“We will relentlessly pursue enablers using the new penalty regime for anyone who designs, sells, or otherwise enables the use of a tax avoidance arrangement which HMRC later defeats,” the tax authority said.
“Similarly, we will impose new civil penalties on those who deliberately enable another person’s offshore evasion or non-compliance.”
HMRC is using a recently introduced system that collates data on non-compliant enablers across sectors that allows “a holistic view across the department”.
“We will continue to build on existing initiatives and operational collaboration as we explore opportunities to deter, disrupt and penalise those who enable their clients to avoid or evade tax, whether they are based in the UK or overseas.”
It added: “We are actively pursuing a number of enablers suspected of facilitating cross-border tax fraud and money laundering.”