Liberal Democrat MP Danny Alexander has proposed introducing a new law which would penalise companies that aid tax evasion in the same way as the individual evaders.
“We should create a new offence of corporate failure to avoid preventing an economic crime and also that organisations who facilitate or encourage evasion should face the same penalty as the evaders themselves,” he said in an interview on the BBC’s Andrew Marr show.
This means companies would have to match the amount customers have paid back in tax with their own money which, according to Alexander, would be a “tough disincentive for them to get involved in the first place”.
“Organisations, be they accountants, banks or whatever, who help people evade tax will be liable for this new offence and crucially liable for financial penalties.”
He said he will try to push the legislation through parliament before the general election in May, but if not it will be included in the Lib Dem’s manifesto.
This announcement comes after recent allegations were made against thousands of individuals who allegedly hid money in undeclared bank accounts in the Swiss private banking arm of HSBC.
“Half-baked new offence”
However, there has been some scepticism about introducing a new tax evasion law, with critics suggesting existing laws should be better implemented.
“We have already got those laws in place, such as conspiracy to cheat and the anti-money laundering laws”, said James Bullock, partner at Pinsent Masons. “So the question is why aren’t they simply using or bolstering those legal structures which are already in place?”
“If the government introduces some half-baked new offence, it might make things more difficult and confuse people.”
Bullock argued that a lot of the political attention on tax evasion is “pre-election rhetoric”. “Really this is all electioneering,” he said. “It’s easy to use these big words and campaigns but turning that into a criminal offence is very different.”
He added: “Tax evasion is illegal and pretty serious and I never understood why HMRC hasn’t made more use of its powers. Really it should be made easier to convict people for not disclosing the full extent of their assets.”
“Welcomed”
On the other hand, multinational professional services network, PricewaterhouseCoopers (PwC), is in full support of new legislation, arguing that “any measures to stamp out tax evasion, which is illegal, should be supported”.
It said: “Responsible financial advisers do not help their clients engage in tax evasion or look the other way if they become aware of it.
“Any measures that penalise advisers that choose to break the law are to be welcomed. We look forward to understanding the detail of this proposal.”
