New “Strict Liability” Offshore Tax Proposals Will Catch Innocent Migrants, Warns LITRG

The Low Incomes Tax Reform Group is concerned that government proposals designed to target tax evaders are likely to catch low-income migrants to the UK who have made a genuine mistake about the UK tax status of a source of income in their home country.

In a consultation on offshore tax evasion, the Government have announced their intention to make it a criminal offence of ‘strict liability’ (i.e. without the need to prove criminal intent) to have taxable offshore income and gains that have not been declared in the UK.

Chairman of the Low Incomes Tax Reform Group (LITRG), Anthony Thomas, said:

“This proposal is poorly designed and we do not agree with the principle of it. Migrants who come to the UK to work will often have a small amount of income arising in their home countries too. They may now face a criminal conviction for having that income because the prosecution does not have to prove that they intended to avoid UK tax.

When it comes to tax obligations, migrants face particular challenges. Many may simply be unaware of their duties in this country; criminal prosecution for ignorance is alarming and unjustified. Legislation must be designed to reflect the difference between active evasion and non-declaration through the lack of requisite knowledge.

LITRG believe that there should have to be at least £5,000 unpaid tax for there to be any question of criminal liability. Additionally there should be a ‘reasonable belief’ defence written into statute. Virtually all criminal offences require an intention to commit them; it is generally neither fair, nor useful, to subject people to criminal punishment for oversights or misunderstandings.

We are disappointed that this consultation process has been undermined by Government having decided the principles of the legislation in advance. The most effective kind of consultation is one where the principles under consideration have been arrived at through consultation with stakeholders from the beginning, not after key decisions on policy have already been taken.”

The submission of the Low Incomes Tax Reform group can be read in full, here. Previous TaxationWeb articles on the new Strict Liability offence can be found at Strict Liability: Innocence is No Excuse

HMRC’s consultation, can be read in full at Tackling Offshore Tax Evasion: a New Criminal Offence