Chartered Institute of Taxation wants offshore offence changes

The Chartered Institute of Taxation (CIOT) has come out in favour of changes to the ‘strict liability’ offence for offshore evasion by urging more safeguards to be put in place.

The accountancy body has warned that taxpayers risk being sent to jail without any proof that they actually intended to cheat the taxman.

Minimum threshold

The main argument revolves around the statutory minimum threshold of evaded tax standing at a proposed £5,000, which the Institute says is too low to offer protection to taxpayers in complicated cases.

The CIOT says that the threshold should be at “a more appropriate level” of £25,000 if the aim of the offence is to target serious offshore tax cheats.

HMRC set the original level intending to ensure that people who make errors concerning relatively small sums do not risk a prison sentence of up to six months.

Limiting the scope

CIOT's John Cullinane said: “We are pleased to note that there will be a statutory defence of reasonable care,” adding: “This will be vital in limiting the scope of the offence."

The CIOT also suggested that the measure should have a ‘sunset clause’ included, which would mean HMRC would have to go back to parliament to extend it.

“We are also concerned that this proposal could be counterproductive for HMRC because the fear of prosecution, with no need to prove intention on HMRC’s part, could discourage taxpayers from coming forward voluntarily,” concluded Cullinane.