30th June 2015
Ahead of the Emergency Budget next Wednesday, Richard Morley, partner of tax dispute resolution at BDO provides his predictions on what tax measures the chancellor may have in store…
Much of what is expected in the first Budget of the new Conservative administration was trailed in the Coalitions March 2015 Budget. However, the devil is in the detail and 2015 Budget contained very little detail. The Government’s five-year ‘tax lock’, across VAT, National Insurance and income tax, will restrict what the Chancellor can and cannot do in the Emergency Budget; suggesting Osborne is likely to come down heavy on tax avoidance and evasion in order to continue reaching his deficit reduction targets. With this in mind, some of the announcements we expect to see include; greater penalties for ‘serial avoiders’, the direct recovery of tax debts for individuals’ bank accounts and more stringent measures against the promoters of tax avoidance schemes.”
Direct recovery of tax debts for individual’s bank accounts
Perhaps most controversially, the 2015 Summer Budget should see the introduction of the direct collection of tax debts from taxpayers’ bank accounts. When the campaign first launched, questions were raised around who exactly it was targeting, as it is likely that the more hardened debtor will keep their money offshore or outside the banking system, so that HMRC cannot get hold of it. Added to this HMRC can only seize money from UK bank accounts. These powers are complex, so it will be interesting to see what is announced and how the Government sees it playing out in practice.”
New strict liability criminal offence
We expect to see a further consultation on the new strict liability criminal offence for those who have not declared the tax due on offshore income, or gains. The logic behind the proposal is straight-forward: tax evasion is a crime; international tax transparency makes it more likely that people will be caught; there are time-limited disclosure facilities allowing people to come forward and those who do not come forward voluntarily will face tough consequences.
Publicly name and shame both evaders and those who enable evasion
A consultation on new civil penalties for enablers of tax evasion or the facilitation of tax evasion, will ensure that anybody involved in hiding money or assets from HMRC will be publicly named and shamed. This will act as a deterrent for advisers, which HMRC has been keen to target, while continuing to deliver the message that tax evasion is a crime, and those involved directly, or indirectly, will suffer the consequences.
Common reporting standard
We expect details of a new disclosure facility to replace the Liechtenstein Disclosure Facility (’LDF’), which will run until the first exchanges of information under the OECD’s Common Reporting Standard (’CRS’). The very limited information given at the time of Budget 2015 suggests that the terms of the new facility will not be particularly favourable, especially when compared with the LDF’s current terms.