HMRC consultation – Tacking offshore tax evasion

HMRC have issued a consultation document on the subject of Tackling Offshore Tax Evasion. Responses can be made up to 3 March 2010.  Download here.

It is difficult to know quite what to make of this.  Having already reached the stage where HMRC is running with a constitutionally unsound political function, and doubtless doing so with “eyes-shut” governmental approval, is it worth bothering ?  There is, after all, the hope, by experts of all political stripes, that a new government will see fit to suspend many of the initiatives being flogged currently in the hope that taking stock will help to get both the law and HMRC back on track.

In any event, it is hard to take much of this seriously when the language is not only inappropriate or misleading but, moreover, runs the risk of being counterproductive.  In this regard, someone at HMRC needs a lesson, or ten, about keeping in the zone of credibility.  Using certain language, of evasion, punishment and suchlike, drawn from that most usually associated with the criminal law will achieve nothing when there are not routine criminal prosecutions to shore up the threat that the layman will expect to be associated with such terms.  

Further, we are told that public awareness of offshore tax issues is at record levels, and that taxpayers increasingly resent the small minority who fall short of meeting their obligations to society.  Setting aside the issue that a condoc from a governmental agency is a wholly inappropriate medium for such politically driven, and unsubstantiated, statements, does anyone believe the sentiment ?  Ask any tax expert for their take on the public mood and, if they are honest, they are most likely to report increased enquiries along the lines of “how can I go offshore to cut my tax”. No one cares much, if at all, about the argument that the young will go uneducated and the elderly will die of pneumonia, because no one tends to believe that taxes are well spent in any event.   

And regardless of whether the wrongdoing is termed avoidance, evasion or, simply, non-compliance, seeking to draw a distinction between UK based and overseas wrongdoing is at odds with the fundamentals of the tax code.  Non-compliance is non-compliance and territorial factors are irrelevant, or at least should be so.  To put forward, and in all apparent seriousness, that non-UK failures should be more heavily penalised than their onshore equivalents, can only be suggestive that the tax code is being used for ulterior purposes. If one of the objectives is to bring about the repatriation of monies to the UK for economic reasons, it would be ironic if that objective is achieved when the banks which would house those funds are threatening to go in the other direction.

Lastly, we are told (para 3.15, page 13) that ... “The media campaign around the NDO will continue – and increase – towards the closure of the disclosure window next year.”  Frankly, what bollox.  Have we actually yet seen anything which merits the start of a media campaign, let alone anything which will continue and increase ?