Offshore tax evaders face '200% penalties'
British taxpayers who evade HM Revenue & Customs by sheltering their money offshore could face penalties of 200% under a new penalty regime announced yesterday.
From April 6, the penalty for evading income and capital gains tax will rise, most markedly on assets or cash stashed in jurisdictions with no formal tax agreements with HMRC.
Dividing the new penalties into three groups, the Revenue said each amount was based on the offshore location’s tax transparency, and should incentivise taxpayers to pay what they owe.
In category one, where the territory automatically exchanges the details of savers with the UK, the evasion penalty will remain the same – up to 100% of the unpaid liability.
In category two, where the information is shared but only upon HMRC’s request, penalties will increase to up to 150% of the unpaid tax – one and a half times up on the current level.
But it is the third category which will sting the most, as evading tax in a jurisdiction that does not share records with HMRC will see the maximum penalty double, to up to 200%.
David Gauke, financial secretary to the Treasury, said: "The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order.
"We have given HMRC an extra £900m to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe.”
The Revenue’s Dave Hartnett added: “We are serious about tackling offshore evasion. Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.”