On 19 August 2014 HMRC launched two consultations on offshore tax evasion, one to strengthen civil sanctions, the other to consider a new strict liability criminal offence of failing to declare taxable offshore income and gains.

The civil sanctions consultation outlines and invites comments on six options:

  1. extending the scope of the offshore penalties regime to Inheritance Tax
  2. extending the offshore penalties regime to cover inaccuracies in category 1 or 2 territories1 where the proceeds are hidden in higher category territories
  3. introducing a new offshore surcharge to complement the offshore penalties regime where offshore assets have been deliberately moved to continue evading tax
  4. extending the 20 years assessing time limit where offshore assets have been deliberately moved to continue evading tax
  5. increasing the quantum of offshore penalties to reflect the number of times offshore assets have been deliberately moved to continue evading tax
  6. introducing a new category, “0”, into the table of Designated Territories, reflecting the new OECD Common Reporting Standard

HMRC’s criminal consultation seeks views on introducing a new criminal offence which would apply where an individual had failed to correctly declare income or gains, irrespective of whether that individual did so with the intention of defrauding the Exchequer.

This new strict liability offence would be the first in the field of direct tax. The consultation does envisage a number of safeguards and defences which would be available, for example it may be a defence for an individual to demonstrate that they had taken reasonable care, or sought and followed appropriate professional advice.

Both consultations are open until 31 October 2014.

To access the consultation on civil sanctions click here

To access the strict liability criminal consultation click here