New and larger financial penalties for tax evaders looks set to go ahead, as the 2016 Budget announces that all measures discussed last year will definitely be introduced this year.
With the new measures, it will be automatically assumed that any individuals or companies found guilty of underpaying or total omission to pay their taxes will be found guilty of a criminal offense without HMRC having to prove it and the individual will be found liable for prosecution.
The strict liability offence is a huge step forward for prosecution in the UK. Previously, such penalties were based on a percentage of the tax due, whereas basing them on a percentage of the underlying assets inevitably leads to a greater figure so, even if HMRC decides not to prosecute under the new strict liability rule, a much greater financial penalty could be imposed.
Specific measures include restricting the amount of tax reduction for any expenses where large multinational companies have borrowed finances in the UK to fund activities elsewhere in their worldwide group. There will also be amendments to the rules on withholding taxes associated with royalty payments used to move profits from the UK to low or no-tax jurisdictions, so that the UK will see an increased profit from this type of tax.