Britons who fail to report the full extent of their earnings are to be “named and shamed” by HM Revenue & Customs (HMRC) as another round of measures to curb tax evasion begins.
HMRC will list on its web site the companies and individuals who are charged penalties for deliberately understating their yearly income and gains by £25,000 or more. The extent of the evasion will also be made public, and penalties of as much as 70 to 100 per cent will be charged, said Sue Holmes, head of tax investigations at Smith & Williamson, the accountants.
The proposed publication of a blacklist represents “a major change in approach”, advisers say, as the Revenue has long protected taxpayers’ confidentiality.
The government hopes to raise over £1bn during this tax year and the next through the raft of proposals to limit tax avoidance and improve the transparency of records, as unveiled in the Budget yesterday.
“People who evade tax, who thought their tax affairs were confidential, could now find their names and addresses splashed over the press,” said Chris Oats, tax partner with Ernst & Young.
On top of its attack on more serious tax dodgers, HMRC will demand up to five-years worth of further records from UK residents who are penalised for deliberately understating their tax bill by over £5,000.
Offshore account holders will also face greater scrutiny as the government rachets up its efforts to eliminate tax avoidance and considers imposing tougher penalties.
Last month, leaders of the G20 nations declared that the “era of banking secrecy is over”. The summit called for the publication of a list of countries that fell short of international standards and threatened to take action against tax havens
As part of the chancellor’s plans, a tax amnesty for offshore account holders will last until March 2010 to offer residents the chance to disclose unpaid tax and settle their debts.
Offenders who took part in a similiar amnesty programme in 2007 were given a 10 per cent fine by HMRC, said Richard Proctor, a partner with Grant Thornton.
Yesterday, Mr Darling also moved to close a few tax loopholes. Residents who take out offshore life insurance policies to create artificial tax losses may no longer offset them against their income.
And UK residents who receive a housing stipend from their employers when they travel may also face higher tax as the way certain leasing agreements are taxed as a “benefit-in-kind” will become more rigid.