What has prompted an increase in alleged tax avoidance prosecutions?
Earlier this week the UK authorities won a high-profile court case regarding offshore trusts and the ability of the authorities to backdate tax demands prior to the 2008 Finance Act. Not only will this see the UK government reclaim hundreds of millions of pounds of unpaid taxes but it has also sent a serious shot across the bows for those who hold funds offshore and have perhaps neglected to declare these to the authorities.
There are perhaps two main reasons for the ongoing increase in alleged tax avoidance prosecutions with the need to raise as much money as possible to offset the budget deficit one prominent reason, as well as improved communications and joint action with overseas counterparts. These two elements have come together to create an environment in which the UK government is seemingly onto the case of many of those who are attempting to avoid tax.
While court cases are obviously very expensive, the government has been very choosy in which particular alleged tax avoidance cases reach the courts. By giving maximum exposure to the successful prosecutions this has prompted many other people to step forward with details of undeclared income and undeclared assets. This is a very cost-effective manner in which to raise the profile of tax evasion and the potential penalties.
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