HMRC has released further details about how it plans to crack down on offshore tax evasion.

Treasury officials announced plans to create a new strict liability offence for offshore tax evasion following Budget 2015 in March. Strict liability refers to a criminal offence where proof of intent is not required to convict the suspected individual.

Under current laws, taxpayers can only be found guilty of tax evasion if HMRC is able to prove that the failure to pay was deliberate. Under the new rules, failure to declare income and gains will alone be sufficient to convict taxpayers.

Under the draft legislation:

  • the offence will only apply to income and capital gains tax
  • it will apply to all offshore income and gains
  • it will only be used if the amount of undeclared tax exceeds £5,000
  • the threshold will not roll over into multiple tax years
  • convicted people will face a maximum 6 month prison sentence.

HMRC is currently consulting stakeholders about the viability of the draft legislation.


Nigel Holland from Holland & Co Chartered Accountants said:

“HMRC will be pleased with this draft legislation because it gives them more power and does not require as much evidence to convict people who have evaded their tax.

However there will exist the possibility that people who do not intend to evade tax but who simply make a mistake on their tax form will now be subject to a criminal conviction which could result in them going to prison.

It is very difficult to know whether someone has made a genuine mistake or when they intentionally intend to evade their tax. HMRC will now have substantial powers which could result in tax payers being imprisoned.

My firm will contact HMRC to express our concern over the introduction of these new changes.”