New powers this year allow HMRC to publicise the identities of parties deemed to be promoting tax evasion. First announced in George Osbourne’s Autumn Statement, this step marks the first in a series of measures which demonstrate Osborne’s tough stance on those appearing to facilitate the avoidance or evasion of tax. The idea was first mooted last year on August 17th when HMRC launched a consultation named: Strengthening Tax Avoidance Sanctions and Deterrents.Within that document, the government stated that it wants to: ‘deter enablers of tax avoidance and considers that financial sanctions would provide a tangible response by minimising the financial rewards those enablers would otherwise enjoy.’
Naming and Shaming Tax Evaders
As of January 1st, these ideas have become law, with HMRC now empowered to fine those seen to be taking deliberate action which helps others evade paying tax. The fines could reach up to ‘100% of the tax they helped evade or £3,000’, whichever is highest. Later this year, another new corporate criminal offence is expected which will target the failure to prevent the facilitation of tax evasion. This law will mean companies are strongly incentivized to keep an eye on rogue employees who might, in any way, encourage or facilitate a client to evade tax. While previous rules meant a corporate criminal prosecution was only possible if there was proof that the board of directors were aware and involved, this revised law will demand that companies hold their employees accountable.
Correcting Past Evasion
Another new rule that has come into force this month refers to the failure to ‘correct past tax evasion.’ This rule states that tax evaders have until 30th September 2018 to pay what is due before the imposition of much more severe sanctions. HMRC’s tough stance is part of a new plan to raise an additional £5bn a year by 2019 to 2020 through increased actions against tax evasion and avoidance.
Jane Ellison, the Treasury financial secretary, commented: “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.”