It could have been omitted because you did not realise it was taxable, or because you did not know that you had become entitled to the income, or even because it is not income but is deemed to be income under an obscure tax provision. No matter! If you have not declared the income, you are a criminal!HMRC issued a consultation paper last August. The consultation closed at the end of October. However it should be stressed that the consultation was not on whether the creation of such a crime would be desirable. The starting point was that the government has decided to introduce such an offence. The consultation was not about whether; it was solely about how. In his foreword to “No safe havens 2014”, the minister, David Gauke, said: “We will introduce a new strict liability criminal offence that could mean jail for those who do not declare taxable offshore income. We will consult on the detail, such as the appropriate safeguards, later in the year”. Some commentators have suggested that as the outcome of the consultation was not referred to in last December’s Autumn Statement, the government has changed its mind and dropped this proposal. Read more about the Autumn Statement:
- Key announcements for SMEs in under 500 words
- Fair amount of banter this year
- What entrepreneurs and business builders want George Osborne to announce
What safeguards did HMRC propose?Well, actually they are not keen on safeguards. They see the purpose of the offence as to make it easy to successfully prosecute criminals. Currently we have a concept that everyone is innocent until proved guilty. That requires the Crown to show not only that a person did not declare the income, but that he did so intentionally in the knowledge that the amount was taxable. HMRC say that it is very difficult to prove that a person who does not declare overseas income intended to evade the tax on it. By rendering knowledge and motive irrelevant, prosecution becomes easy. Of course it’s a shame about the innocent but surely people know that they can trust HMRC and the DPP. They don’t need the protection of the law because nobody who is obviously innocent is likely to be prosecuted. HMRC are convinced that they can themselves distinguish between the innocent and the guilty and this offence is aimed only at the guilty. The innocent have nothing to worry about. As they say in the consultation, “the availability of [a statutory] defence could make it more difficult to secure successful prosecutions, undermining the case for introducing the new offence”. If there has to be a safeguard, they have put forward two possible ones.
- The taxpayer can demonstrate that he had taken reasonable care in conducting his tax affairs; and
- The taxpayer can demonstrate that they had sought and followed appropriate professional advice.
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