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Finance Bill to reverse tax evasion burden of proof onto tax payers

Solicitor claims the offence could lead to 'someone being found guilty of committing tax fraud following a genuine mistake'

10 December 2015

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The draft legislation of the Finance Bill 2016 contains a new criminal offence for tax evasion, which 'removes the need to prove intent for offshore tax evaders'.

The law will reverse the burden of proof onto tax payers, as they will have to prove that their affairs have not been ordered with the intention of evading tax.

The document states that the offence 'will apply to only those with significant levels of non-compliance', but the seismic shift it represents was widely decried at the consultation stage and it has not been well received now.

David Sleight, a partner at Kingsley Napley, believes the offence is in opposition with what has historically been seen as constituting tax evasion, that is, the deliberate intention to unlawfully deprive the public purse of tax it is owed.

Sleight commented: 'It is disappointing that HMRC has not taken previous strong opposition to this measure on board. Tax evasion by definition requires a deliberate act to deprive the revenue of monies to which it is entitled.

'There must therefore logically be a specific intent to evade tax for the offence to be made out. As such, the basis of any prosecution should require proof of fraudulent or dishonest behaviour. The problem with what is proposed is that someone could be found guilty of committing tax fraud following a genuine mistake.'

However, the government appears to be resolute in its target and does not share these concerns.

The financial secretary to the treasury, David Guake, believes the legislation is an essential tool in delivering on the government's promises to tackle tax avoidance.

He commented: 'The government is committed to creating a tax system that is easy to understand, simple to engage with and hard to evade. That's why I am pleased to be announcing draft legislation that will help us deliver on this commitment to taxpayers.'

However Sleight believes the government has more than enough power and resource at its disposal, making the law unnecessary.

'The question is, why do we need this offence at all?' he asked.

'Criminal prosecutions for tax offences have increased by 300 per cent since the last spending review in 2010, and in his Autumn Statement, the chancellor pledged a further £800m to tackle tax evasion.

He continued: 'No examples have been given of the kind of behaviour which would be caught by the proposals that are not already covered by offences under current tax evasion provisions. The proposed legislation is complex, confusing and is likely to create more litigation than it resolves.'


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