Offshore tax evaders are likely to face stiffer penalties under measures recently announced in the 2014 UK Budget. The UK government has said that stricter penalties would apply to individuals who hold money in hidden bank accounts in countries that do not share tax information with the UK.
After the changes are made HMRC would only have to show that the undeclared income was subject to UK tax, rather than that the tax had been evaded on purpose. This change is important, as it can be difficult to prove that there was an intention to deliberately evade tax whereas the new rules will make it easier for the government to justify its case and apply penalties. Individuals under investigation by the tax authorities could be charged with a strict liability criminal offence.
In addition to this the UK Government is also looking at the current financial penalties to make sure that they are providing an effective deterrent to tax evasion. The UK government is to consult on the possibility of raising the existing penalty limit of up to 200 percent of the tax owed. It will also look at ways to increase tax penalties if individuals are considered to be moving money around to avoid detection. The penalty regime could also be widened to apply also to inheritance tax.
