A new civil penalty system for practitioners & service providers who facilitate clients to evade tax would be introduced after the up-coming general election in the UK, if the current Conservative-Liberal Democrat coalition remains in power.
Currently according to UK law it is a criminal offence for individuals to enable and encourage tax evasion, according to the UK Treasury. The new civil measures will be the subject of consultation, and may impose a similar penalty on advisors as for those on tax evaders. These penalties would be extended so that a proportion of the assets held in undeclared offshore bank accounts can be confiscated. Tax evaders and ‘enablers’ may also be publicly named.
Furthermore, the criminal offence of assisting tax evasion is now to be extended to companies, with the creation of a new offence of corporate failure to prevent tax evasion. A strict liability criminal offence of offshore tax evasion, which has been postponed from last year, is now being reconsidered.
Even stricter penalties against tax avoidance (as opposed to evasion) are also to be introduced against ‘serial avoiders’ i.e those who continue to use new tax avoidance schemes. Users of such schemes that are countered by the request of the general anti-abuse rule (GAAR) will face exceptionally heavy penalties, as the Treasury considers that these schemes will be ‘the worst cases of tax avoidance’.
Lucy Brennan from Saffery Champness’ private wealth group commented that criminal liability for professional service providers who aid tax evasion is inevitable. However care must be taken to apply these sanctions fairly. She went on “most people do not realise that the tax avoidance industry on personal taxes has long since vanished and it is the historic schemes which are making the headlines.