UK tax evaders face extra fines based on location

| 03/02/2011

(CNS): UK taxpayers who have accounts in the Cayman Islands will not fall victim to stiffer penalties if they fail to declare assets held here to the British taxman, after Cayman was listed as a category 1 jurisdiction in the HM Revenue & Customs new rating. From 6 April 2011 penalties for offshore non-compliance – for income tax and capital gains tax – will be linked to the tax transparency of the country involved and those using category 3 countries could see an increase of 200% in the penalties. Under-declared income and gains from territories which do not automatically share tax information with the UK will result in higher fines than for those who have undeclared income in territories that are sharing information.

David Gauke, Exchequer Secretary to the Treasury, said: "The game is up for those going offshore to evade tax. With the risk of a penalty worth up to 200 per cent of the tax evaded, they have a great incentive to get their tax affairs in order. We have given HMRC an extra £900m to tackle tax cheats because we are prepared to act against the minority who refuse to pay what they owe.”

Dave Hartnett, Permanent Secretary for Tax, at HMRC said the UK government was serious about tackling offshore evasion.

“Hiding tax liabilities offshore believing that you will never be discovered is no longer a realistic hope.
"These new penalties will increase the deterrent against offshore non-compliance. They build on other activity, including signing tax information exchange agreements, requiring information about offshore bank accounts and disclosure opportunities, including the Liechtenstein Disclosure Facility (LDF),” he added.

The new penalties for income tax and capital gains tax non-compliance classify territories into three groups, which determine what level of penalty will apply for non-compliance.

The Cayman Islands is one of only 36 countries in category one with most other offshore financial centres being left in category two. According to the HMRC where the income or gain arises in a territory in ‘category 1’, the penalty rate will be the same as under existing legislation. Where the income or gain arises in a territory in ‘category 2’, the penalty rate will be one and a half times the existing penalty and for those in ‘category 3’, the penalty rate will be double up to 200 per cent of tax.

Go to HMRC categories
 

Print Friendly, PDF & Email

Category: Business

About the Author ()

Comments (6)

Trackback URL | Comments RSS Feed

  1. Tobe Le Rone says:

    Nobody ever mentions Switzerland

  2. expat weirdo says:

    Oh, so is this admitting that the Caymans is actually used for tax evasion … yet the government denied this was the case in another article a while back…

     

     

    • Anonymous says:

      Er no. This is actually a very positive thing for Cayman. It is saying that we are relatively transparent and therefore unlikely to be used for tax evasion. Those that are most likely to be used for tax evasion are placed in lower categories and have the hefty penalties applied.

  3. Slowpoke says:

    Hmm, no mention of Switzerland or Lichtenstein? 

  4. whodatis says:

    "We have given HMRC an extra £900m … "

    Lol!! Sounds a bit counterproductive – are the stakes really that high?

    Sounds like things are about to get serious.

    Alrighty then – listen fellas. I am a born and bred Caymanian.

    We are known to be "warm and friendly" people.

    To prove this – I, Whodatis, am willing to be your warm and friendly friend for a measly, hmmm …. let us say … 10%.

    Deal or no deal?

    :o)

  5. Anonymous says:

    Excellent! At least the Tories don’t seem hell bent on our demise as an offshore financial centre as Labour was.