HMRC issues final reminder for offshore tax evaders
Wednesday, 30 March 2011 10:20
HM Revenue and Customs (HMRC) has issued a final reminder alerting individuals to the forthcoming changes to the penalty regime for offshore non-compliance.
From 6 April 2011 new penalties will apply to income tax and capital gains tax. They will be linked to the tax transparency of the territory in which the income or gain arises.
Where it is harder for HMRC to get information from another country, the penalties for failing to declare income or gains arising in that country will be higher.
'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% of the tax evaded,' warned David Gauke, Exchequer Secretary to the Treasury.
Under the new system there will be three new levels of penalty:
· where the income or gain arises in a territory in 'category 1', the penalty rate will be the same as under existing legislation
· where the income or gain arises in a territory in 'category 2', the penalty rate will be 1.5 times that in existing legislation - up to 150% of tax
· where the income or gain arises in a territory in 'category 3', the penalty rate will be double that in existing legislation - up to 200% of tax
If a person can demonstrate that they have taken reasonable care to get their tax right, they may escape a penalty. Similarly, HMRC may not apply a penalty where an individual has a reasonable excuse for a failure to notify taxable income.
Where penalties are due, HMRC can reduce them depending on how helpful the individual is in assisting it to establish the correct amount of tax due.
More information on increased penalties for offshore non-compliance can be found at http://www.hmrc.gov.uk/news/offshore-penalties.htm.