UK Government to take steps on tax evasion earlier than planned
Advance versions of David Cameron’s speech to the House of Commons today point to the UK Government’s proposed tax evasion legislation going ahead earlier than initially anticipated. The comments come at a time when Cameron has been facing heavy criticism about his family’s tax history, which market commentators are even concerned may have an effect on the public’s confidence in an In or Out vote at the EU Referendum on 23rd June. With the UK Prime Minister planning to host and speak at an anti-corruption summit of global leaders in May, the announcement is likely a conciliatory move in order to undo the reputational damage in the eyes of the public and other policymakers.
The legislation against tax evasion was announced in the 2015 Budget, but was not due to come into force until 2020. According to David Cameron’s statement scheduled for today, the new legislation is now due to be brought in later this year. The measures aim to raise £3.1 billion for the UK Treasury from penalties on tax avoidance. Current policy on anyone admitting tax evasion means fines on top of the tax owed, but immunity from prosecution. The new measures, if in the format as announced at the March 2015 Budget, would mean greater fines and no immunity, meaning hefty penalties, large tax bills and the threat of prosecution for anyone found to have evaded taxation. Persistent offenders would also be “named and shamed” under this system. Steps were also announced to clamp down on offshoring and ensure that multinational firms are paying the right level of taxes.
Smart Currency Business Director, Carl Hasty, comments:
“New tax avoidance measures mean that companies operating internationally need to be even more careful to be clear on the various taxes owed, both as a company and at an individual level. While companies feel the pressure of new global tax policies on their profits, it becomes more important to create appropriate risk management strategies to minimise the risk of other factors likely to erode profit margins, such as currency risk and fluctuating exchange rates. With considerable market volatility worldwide, in response to concerns about economic growth – both in the UK and its major trading partners – and the ongoing uncertainty surrounding the referendum in the UK, companies need to reassess their exposure to these global risks and plan accordingly.”