Tougher penalties looming for offshore tax evasion

This continues HM Revenue & Customs’ offensive against undeclared foreign income and gains. Recent disclosure facilities (the Offshore Disclosure Facility and the Liechtenstein Disclosure Facility) have highlighted the risk that such undeclared taxes present to the UK treasury.

HMRC have categorised overseas territories in to three different types, broadly depending on whether on not information on savings income is exchanged automatically (category 1), on request (category 2) or not at all (category 3) .The rate of penalty charged will reflect the category territory involved, with the penalty rates being up to 100%, 150% and 200% of the tax due respectively. However, reductions apply where the taxpayer has taken reasonable care or has a reasonable excuse. Taxpayers who approach HMRC to disclose undeclared foreign income and gains will also benefit from penalty reductions. Therefore, it is important if you have concerns to seek advice and make a disclosure at the earliest opportunity should this be necessary.