News story

New Year brings in new penalties for enablers of offshore tax evasion

The raft of measures will create a level playing field for the vast majority of people and businesses who play fair and pay what is due.

Accountants, bankers, lawyers and other advisors who enable offshore tax evasion will face tough new sanctions from today (1 January 2017).

The new powers will see individuals or corporates who take deliberate action to help others evade paying tax facing fines of up to 100% of the tax they helped evade or £3000, whichever is highest. On top of this the taxman will also be able to publicly name the enabler.

While tax evasion has always been illegal, this law will mean HMRC can, for the first time, charge civil penalties on the facilitators of the tax evasion who provide planning, advice or other professional services or physically move funds offshore.

The UK is one of the first countries in the world to introduce this power, which was originally announced at Budget 2015 and legislated for in the Finace Bill 2016.

Financial Secretary to the Treasury, Jane Ellison said:

Tax evasion is a crime and as a government we have led reform of the international tax system to root it out.

Closer to home we are creating a tax system where taxes are fair, competitive and paid.

The raft of measures we have introduced to tackle avoidance and evasion will create a level playing field for the vast majority of people and businesses who play fair and pay what is due.

This year will also see the government introduce a new corporate criminal offence of failing to prevent the facilitation of tax evasion. Under the new rule currently being legislated for, companies will be held liable if an individual acting on its behalf as an employee or contractor facilitates tax evasion. Previously there needed to be proof that the board of directors were aware and involved in facilitating the evasion.

This is alongside introducing a new requirement to correct past tax evasion, which will see anyone who has failed to correct past evaded taxes by 30 September 2018 hit with tough new penalties, and consulting on a new requirement for businesses and individuals who create complex offshore financial arrangements that bear the hallmarks of enabling tax evasion to notify them to HMRC.

Since 2010 HMRC has secured over £130 billion in additional compliance revenues as a result of actions to tackle tax evasion, tax avoidance, and non-compliance. It has also secured more than £2.5 billion specifically from offshore tax evaders.