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Further to our earlier blog in March 2016, the Finance Act 2016 received Royal Assent on 15 September 2016. The Finance Act 2016 creates new criminal offences that remove the need to prove intent for the most serious cases of failing to declare offshore income and gains. This blog post considers the new offences in further detail.
Section 166 of the Finance Act 2016 establishes new strict liability criminal offences for those who have income or gains outside of the UK and evade their UK income tax or capital gains tax responsibilities. Section 166 creates the offences by inserting new sections 106B to 106H into the Taxes Management Act 1970. The provisions criminalise the failing to give notice of liability to income or capital gains tax, failing to provide a return or failing to make an accurate return regarding offshore income, assets or activities. The key provisions in relation to the new offences are as follows:
As we have discussed before, HMRC are aggressively clamping down on all forms of tax evasion. Indeed, it is anticipated that the Chancellor will shortly announce further criminal measures in this field through the Criminal Finances Bill. This Bill is likely to contain various provisions in relation to tax evasion including, amongst other things, a new corporate criminal offence of failure to prevent the facilitation of tax evasion.
We have commented separately on the sensibleness of HM Government’s general approach to this matter. Notwithstanding our concerns, it is clear that, in tandem with the growing range of civil measures, individuals, corporates and their advisers need to be aware of HMRC’s increasingly probing approach to a person’s tax affairs and his tax planning.
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