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Offshore tax dodgers run out of time


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Issued on 31 January 2011 - HMRC

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. There will be increased penalties in place for under-declared income and gains from territories which do not automatically share tax information with the UK.

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:

"We are 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)."

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.


Transparency of territory


Category 1

  • UK
  • Territories with automatic exchange of information on savings with the UK

The penalty will be the same as now - up to 100 per cent

Category 2

  • Territories which exchange information on request with the UK
  • Least developed countries without information-sharing agreements with the UK

The penalty will be 1.5 times that due under existing rules - up to 150 per cent

Category 3

  • Territories which don’t exchange information with the UK

The penalty will be double that due under the existing rules - up to 200 per cent

The first Self Assessment returns to which the penalties would apply are those concerning the 2011/12 tax year (filed by January 2013).


1. The Offshore Disclosure Facility (ODF) – the first such offshore disclosure opportunity – ran from April to November 2007. It generated over £450m in tax, interest and penalties – with more from follow-up investigations.

2. The success of the ODF was built on by the New Disclosure Opportunity (NDO) which ran from 1 September 2009 until 12 March 2010.

3. The ground breaking Liechtenstein Disclosure Facility opened on 1 September 2009 and will run until 31 March 2015. Under its terms all financial intermediaries in Liechtenstein will require those who should disclose their taxable assets to HMRC to do so or have their accounts closed. The LDF is expected to generate well over £1bn by the time it closes.

4. More information on increased penalties for offshore non-compliance can be found at

5. The designation of territories can be found at

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Article Published/Sorted/Amended on Scopulus 2011-02-02 00:37:35 in Tax Articles

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