UK taxpayers who fail to disclose offshore income or gains, either by failing to notify HMRC of their chargeability to UK tax, failing to deliver a tax return or by submission of an incorrect tax return will face imprisonment and swinging penalties, Blick Rothenberg has said.

The new rules were devised partly in response to the immense political, media and public pressure for HMRC to criminally investigate and secure convictions against tax evaders, with the focus on wealthy individuals, and are likely to drive a further increase in the number of criminal investigations relating to offshore tax evasion.

The firm said that critically, the new rules do not distinguish between those who have intentionally misled HMRC and those who have merely “got it wrong” since the legislation is framed in such a way that the mere existence of undisclosed offshore income and gains is sufficient to enable the sanctions to bite. The prosecution does not have to prove that there was “mens rea” (a guilty mind).

Despite the “strict liability” nature of the offence the taxpayer can put forward the defence that he had a reasonable excuse for the failures or inaccuracy. However the onus is squarely on the taxpayer to demonstrate this.

Blick Rothenberg partner Gary Gardner said: “The offence applies from the tax year 2017/18 which means that HMRC will begin to take action from 6 October 2018 because taxpayers have until six months after the end of the year of assessment in which to notify HMRC of their chargeability to tax which means the cut-off date for such notification is 5 October.”

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