HM Revenue & Customs (HMRC) will be clamping down on anyone evading tax, by declaring overseas income and gains will apply to income from all jurisdictions abroad and not just income and gains who have omitted to sign up to the Common Reporting Standard (CRS) as originally arranged.
Going forward, it will be an offence if a UK taxpayer fails to notify HMRC that they are chargeable to income tax or capital gains tax in respect of offshore income, assets or activities or fails to file a return or include such income or gains on a tax return.
Under current UK law, a taxpayer cannot be found guilty of a criminal offence if it can be reasonably proven that the omission was unintentional. Under the new strict liability regimes, failure to declare the income is sufficient for prosecution with no need to prove that it was deliberate. The maximum penalty for the offence will be imprisonment of up to six months.
The HMRC released a statement:
“Although we may receive some information under the CRS, supporting evidence to demonstrate the intent of the taxpayer will still be extremely difficult, particularly if the enabler is based offshore.”
In spite of advances in international co-operation there still remain challenges the UK faces in detecting and countering offshore non-compliance over and above those faced for domestic non-compliance, specifically where the tax transparency of other countries is limited or doesn’t exist.