A new criminal offence brought in as part of measures to crackdown on undeclared offshore tax liabilities is 'hugely controversial', the Chartered Institute of Taxation says.

The Government delivered a message this week of 'pay what you owe or face prosecution' to those not declaring their offshore tax liabilities.

But the new criminal offence of failing to declare taxable offshore income and gains -set out in an HM Revenue and Customs consultation paper – could risk making criminals of people who have simply made a mistake.
That is the warning from Gary Ashford, a spokesman for the Chartered Institute of Taxation.
He said: "Creating a new strict liability criminal offence of failing to declare taxable income and gains arising offshore would be a hugely controversial step.
"HMRC already has the power to criminally investigate anyone with either UK or offshore untaxed funds where they can show these were deliberately not declared.
"If they cannot show dishonesty or criminal intent then civil penalties, up to double the amount of tax owed, in addition to the tax itself, can still be levied.
"The new offence would enable criminal convictions, potentially with custodial sentences, to be made without any requirement to show the defendant wilfully acted in a criminal way."
He said the new offence would go against the general presumption that mens rea (guilty mind) is required to impose criminal liability.

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He said: "Strict liability offences have up until now mostly been used for matters with immediate risk to the public such as speeding offences or selling contaminated food. It's hard to see how non-declaration of tax fits into this category.
"UK and international taxation is a minefield of complexity, and the Government must recognise that while some taxpayers actively seek to hide their income by failing to declare their accounts to HMRC, there will be individuals who make mistakes in their financial affairs without intending to act wrongly.
"Not everyone who under-declares their tax is acting with criminal intent."
David Gauke, Financial Secretary to the Treasury, said: "There is nothing wrong with holding assets offshore but investors must pay the tax they owe here."