Financial News

  • 15 April 2014, 6:00

Osborne Jail Threat For Offshore Tax Evaders

Wealthy people who stash money in offshore accounts to evade paying tax could be sent to jail, the government has said.

Chancellor George Osborne said new proposals could mean that people who hide their cash overseas could face criminal charges even if they did not intend to evade tax.

Mr Osborne, who is consulting on the new powers, said there would be "no safe haven" for anyone who cheats the Exchequer.

It comes after concerns that some wealthy people are costing the government millions of pounds a year by keeping money away from the glare of UK authorities.

HM Revenue & Customs will have the power to prosecute people who do not declare their foreign income, regardless of whether they intend to avoid payment.

Previously, in order to earn a conviction with a jail sentence, prosecutors had to show that individuals intended to avoid paying tax on foreign income.

Mr Osborne, who has been at the International Monetary Fund meeting in Washington, told the Financial Times: "We are changing the balance of the law so the burden of proof falls on those who are hiding their money offshore and we don't have to prove that they intended to do so."

He added: "It is totally unacceptable for people not to pay the tax that is due and the message will be clear now with this new criminal offence that if you're evading tax offshore, there is no safe haven."

HM Revenue and Customs (HMRC) has been criticised for not prosecuting enough tax evaders.

Sky News' Ecomonics Editor Ed Conway said there has been much international discussion about what can be done to clamp down on people who hide money overseas.

David Cameron has previously announced a crackdown on so-called shell companies to help combat tax evasion and corruption.

The new criminal offence and sanctions are expected to come into effect next year, but many are expected to contribute to the consultation before that can happen.

The announcement was greeted by dismay from some, with critics suggesting the law could result in people being jailed when they were genuinely ignorant of the law.

Bill Dowdell, head of tax at Deloitte, told The Times: "It's horrifying. People should not be put in prison unless you can prove intent.

"I'm shocked to find that an offence which could lead to a prison sentence could be decided on a strict-liability basis."