The Finance Bill 2016 ("FB 2016") introduces three new criminal offences tackling tax evasion and avoidance
Part 10 of the FB 2016 contains provisions for tackling tax avoidance and evasion, including three new criminal offences seeking to tackle tax evasion and avoidance, the effect of which is to criminalise the failing to give notice of income or capital gains tax due, failing to provide a return or failing to make an accurate return without any need for the prosecution to prove an intention to evade tax. The new criminal offences are backed with penalties of up to 51 weeks imprisonment.
Offence of failing to give notice of being chargeable to tax
It is now an offence of failing to give notice of being chargeable to tax. A person who is required to give notice of being chargeable to income tax or capital gains tax (or both) for a year of assessment and who has not given that notice by the end of the notification period commits an offence if:
– The tax in question is chargeable (wholly or in part) on or by reference to offshore income, assets or activities;
– The total amount of income tax and capital gains tax that is chargeable for the year of assessment on or by reference to offshore income, assets or activities exceeds the threshold amount.
It is a defence for a person accused of an offence under this section to prove that the person had a reasonable excuse for failing to give the notice required by section.
Offence of failing to deliver return
A person who is required by a notice to make and deliver a return for a year of assessment commits an offence if:
– The return is not delivered by the end of the withdrawal period;
– An accurate return would have disclosed liability to income tax or capital gains tax (or both) that is chargeable for the year of assessment on or by reference to offshore income, assets or activities;
– The total amount of income tax and capital gains tax that is chargeable for the year of assessment on or by reference to offshore income, assets or activities exceeds the threshold amount.
It is a defence, for a person accused of an offence under this section, to prove that the person had a reasonable excuse for failing to deliver the return.
Offence of making inaccurate return
A person who is required by a notice to make and deliver a return for a year of assessment commits an offence if:
– The return is not delivered by the end of the withdrawal period;
– An accurate return would have disclosed liability to income tax or capital gains tax (or both) that is chargeable for the year of assessment on or by reference to offshore income, assets or activities;
– The total amount of income tax and capital gains tax that is chargeable for the year of assessment on or by reference to offshore income, assets or activities exceeds the threshold amount.
It is a defence, for a person accused of an offence under this section, to prove that the person had a reasonable excuse for failing to deliver the return.
Commentary
The significance of the FB 2016 is to make a change to the existing legislation by creating new offences that remove the need for the prosecution to prove an intent to evade tax by failing to declare offshore income. The changes effectively make evasion an offence of strict liability, or even negligence, with the only statutory defences being reasonable care or reasonable excuse. Such terms are not defined. These offences are all backed by criminal penalties. A person guilty of an offence is liable, on summary conviction, to a fine, or a term of imprisonment for up to a year, or to both.
The above is not legal advice; it is intended to provide information of general interest about current legal issues.
At Gepp & Sons we offer professional legal advice including capital tax planning for wealthy individuals and families, succession planning for family businesses and capital tax and estate planning for individuals. This includes tax planning through businesses, business property relief, agricultural property relief, inheritance tax and capital gains tax. If you require further information on this or other related issues please contact Lisa Carter on 01245 228127 or email carterl@gepp.co.uk
If you require legal representation for any crime related offences please contact our specialist Crime Team on either 01245 358894 or bricer@gepp.co.uk.
