Despite supporting HM Revenue & Customs efforts to tackle tax evasion, CIOT said it is opposed to the government installing a new strict liability offence for offshore tax evasion.
The offence means taxpayers could face a conviction without proof that they deliberately intended to evade tax.
“We do not support this proposal because it cannot be right that an individual who simply makes a mistake in their tax affairs without any intention to act wrongly, should be charged with and possibly convicted of a criminal offence,” said CIOT tax policy director John Cullinane.
He pointed out that some people have already been taxed in an overseas jurisdiction and so are not aware that funds are taxable in the UK, or some inherit offshore accounts without any direct knowledge of it. “Taxpayers in these situations should absolutely not face criminal charges,” Cullinane said.
“We do not think that it is reasonable for someone to be convicted, let alone imprisoned, for offshore tax evasion without guilt being proved beyond reasonable doubt.”
Serious evaders
The UK body also questioned whether a new offence is necessary given HMRC already has “wide-ranging” powers for investigating criminal wrongdoing.
“It is right that HMRC has focused on ensuring that the offence is targeted at only the most serious evaders,” said Cullinane.
The CIOT set out its objections in a submission to HMRC on Friday last week.
It recommended that the introduction of the offence be delayed until 2017 to give people time to put their affairs in order.
The body also pointed out that cases involving tax evasion often involve complex technical issues and legal arguments which may not be appropriate to be heard in a magistrates’ court.
“If the government and HMRC are intent on introducing the offence then the safeguards will need to be extremely robust,” the document reads.
