Her Majesty’s Revenue and Customs (HMRC) published two consultation documents yesterday setting out plans to introduce a new strict liability criminal offense of failing to declare taxable offshore income and gains and options to strengthen civil sanctions relating to offshore tax evasion. HMRC explains that a “strict liability offence is a criminal offence where it is not necessary for the court to ascertain the state of mind of the defendant before convicting.” HMRC states that this would be the first strict liability criminal offense in the field of direct tax under UK law, but that such a step is justified because the UK government has “offered generous opportunities for people to put their offshore tax affairs on the right footing” under its voluntary disclosure programs. Although a taxpayer’s intentions would be irrelevant in determining his or her criminal liability under the proposal, HMRC requested comments for whether it should allow affirmative statutory defenses for “(i) a person to demonstrate that they had taken reasonable care in conducting their tax affairs, or (ii) a person to demonstrate that they had sought and followed appropriate professional advice.” On the civil side, HMRC is considering extensions to the existing penalty regime to increase deterrence and reflect “the new global standard in tax information exchange.”
The criminal consultation document can be accessed here.
The civil consultation document can be accessed here.