In the news

George Osborne has announced his intention to make offshore tax evasion a criminal offence in
the 2014 budget. In some ways this was a bit odd in that tax evasion is already a criminal offence!

The problem (for HMRC) is that they have to prove “intent” and this can be difficult. In their consultation
issued last month HMRC make it clear that they intend to make “non-disclosure” of offshore income a
“strict liability” offence; there will be no need for HMRC to prove intent. This will almost certainly make
prosecution of those who fail to disclose overseas income much easier for HMRC.

Phil Needham comments; “This seems not to be targeted at tax avoidance schemes which have offshore
elements, instead it is targeted at the much cruder approach of simply not telling the HMRC about

overseas income. Although HMRC and politicians probably have wealthy individuals with overseas bank
accounts and investments in mind, I suspect that there are also a fairly large number of less wealthy
individuals who have income from overseas rentals and holiday lets who might get caught by this net.
To my initial surprise the government are proposing to make a statutory defence of having followed
professional advice. This is important as in many cases
overseas income will not be reportable, and it is
by no means easy for taxpayers to wade through complex legislation and tax treaties to work this out.
With a regime of strict liability in place some taxpayers who have made a genuine mistake could end up
with a criminal record, perhaps even in prison. It is therefore more important than ever then that any UK
taxpayer with overseas income gets advice from a properly qualified and experienced firm of accountants
such as Hornbeam.”

Direct Access to Your Bank. A more controversial proposal by HMRC is to obtain the right to take money
straight out of taxpayers accounts, ie. without a court order. Many bodies ranging from the Law Society to
the Building Societies Association have warned against this, however I suspect HMRC will get their way.
Whilst HMRC claim they will use this power against a very small number of persistent offenders, my
concern is that parliament will not restrict the power sufficiently. In this office in the last few weeks
alone we have had: 

(1)   Tax Collectors aggressively trying to collect £1,300.00 from a client who was up to date with
        her income tax. Enquiries via the agent’s help-line, revealed that this was for a “potential” 
        understatement of benefits three years ago, which someone at HMRC had entered onto the
        record.  I am still incredulous of this. The concept of taxing “potential” income does not exist
        in UK law.  How could it. Hornbeam had submitted correct tax returns for all of the years
        involved and there was no liability, but it took several letters to get the charge lifted.

(2)    Tax Collectors gave a client 24 hours to pay non existent outstanding PAYE, otherwise they
        would send in bailiffs. This is another change to UK regulations which I must have missed.
        Bailiffs are only entitled to distrain for goods after the matter has been through the courts!