The Chancellor used his Pre Budget Report to outline plans for dealing with offshore tax dodging. Previously HMRC only had the power to fine tax dodgers a maximum of 100% of the unpaid tax but this will now double to 200%. This is one of the aims set to save the government money lost through lost tax – a figure which currently stands at £5bn per year. The government also stated that tax evasion cost them £40bn in 2007-2008 financial year alone.
The government stated: “Legislation will be brought forward to ensure that those who fail to declare offshore tax liabilities will face the tough penalties attracted by deliberate tax evasion. There will also be a new requirement to notify HMRC when opening offshore bank accounts in certain jurisdictions, supported by a separate penalty regime. Evading tax offshore could therefore result in combined penalties of up to 200% of the unpaid tax.”
HMRC is currently advising people and companies holding money offshore to take advantage of their ‘disclosure opportunity’ and thus benefit from reduced fines as long as a request for disclosure has not already been made by HMRC. The deadline for this disclosure is January 4th. The penalty for those involved in this scheme will be limited to 10% of the tax owed although they will still be liable for interest on the tax.
Talking about his latest campaign, the government commented: “This is the last chance for offshore tax evaders – of they do not come forward now, they can expect much tougher penalties in the future.”