‘Game Up’ Warning on Offshore Non-Compliance
New penalties of up to 200 per cent could be imposed on anyone hiding money offshore, HM Revenue & Customs (HMRC) has warned.
From 6 April 2011, penalties for offshore non-compliance – for income tax and capital gains tax – will be linked to the tax transparency of the country involved, with higher penalties introduced for under-declared income and gains from territories that do not automatically share tax information with the UK.
David Gauke, Exchequer 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.”
Dave Hartnett, Permanent Secretary for Tax at HMRC, said: "These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF)."
The new penalties for income tax and capital gains tax non-compliance classify territories into three groups that determine the level of penalty that applies to non-compliance. These are:
- 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 per cent 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 per cent of tax
The first self assessment returns to which the penalties would apply are those concerning the 2011-12 tax year (filed by January 2013).
LINK: Details of new penalties