Tax experts claim new laws that allow fines and criminal charges for making mistakes on tax returns are unfair to expats.
The Chartered Institute of Taxation is urging HM Revenue & Customs (HMRC) to rethink the rules as a matter of principle.
CIOT believes that elderly expats are at risk from the rule changes because they have too little contact with HMRC, which is increasingly pushing help and services online.
Elderly expats are disempowered by the shift to digital services because they are the least likely to have online access.
Jon Preshaw, the chairman of CIOT’s tax sub-committee argues that fines of up to £25,000 that could be imposed by HMRC even if someone made a simple mistake on their tax return is too draconian a measure and a punishment that does not fit the crime.
“We agree that more should be done to tackle tax evasion,” he said. “But it can’t be right that an elderly vulnerable expat who has paid tax on gains or income as they should in the country where they live is open to investigation and possible conviction for a criminal offence.”
CIOT also questions whether HMRC should have the new powers.
Preshaw explained HMRC already had the power to investigate suspected tax evasion as a criminal offence, and if criminal intent is not proved, civil penalties are doubled.
“HMRC should make greater use of this power rather than trap many people who have made innocent errors into criminal investigations,” he said.
“Others beside expats are at risk. Some British taxpayers could inherit an offshore account when someone dies without their knowledge and fail to declare the interest, which under the new HMRC powers is a strict liability criminal offence and makes them guilty of failing to declare offshore income.”
UK taxpayers who may have undeclared offshore accounts or investments are urged to tidy up their financial affairs quickly.
International tax authorities will start sharing financial information about foreign nationals from January 2017, but the data will start from 2016.
“If you need to clear up any offshore maters to avoid fines and penalties, now is a good time to do it,” said Preshaw.
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