The UK government has unveiled tough new measures that will make it easier to prosecute people that avoid paying taxes by hiding their money offshore.

The UK government has unveiled tough new measures that will make it easier to prosecute people that avoid paying taxes by hiding their money offshore, raising controversy over whether it is undermining due process of law in its zeal for revenue.

Under the new proposals, those that hide their money offshore could face increased fines or be sent to jail, even if they did not intend to evade tax.

At present, HM Revenue and Customs must demonstrate that when someone has failed to declare offshore income, the individual intended to evade tax. However, under the new regime, in order to bring successful prosecutions tax officials will only have to demonstrate that the income was taxable and undeclared.

“The government has taken significant steps to clamp down on those hiding their money offshore. HMRC has brought in over £1.5 billion ($2.5 billion) over the last two years and, through our leadership at the G8, we have taken significant steps towards greater transparency and tax information sharing,” said UK finance minister George Osborne.

“But there can be no let-up and we will continue to pursue offshore tax evaders. Those who continue to believe they can hide wealth offshore should know that there is no safe haven and that serious consequences await them,” he added.

Tax evaders currently face an existing penalty of up to 200 per cent of tax for hiding their money in offshore accounts.

The government said it will consult on increasing the maximum penalty and extending the regime to include inheritance tax, as well as examining plans to reward whistleblowers for significant information that helps uncover hidden untaxed offshore assets.

Enhanced civil sanctions

The announcement comes as the government published an update to its offshore evasion strategy, No Safe Havens 2014.

The document said that the consultation announced in the 2013 Autumn Statement will be published shortly which explores a number of options for strengthening the civil sanctions available for tackling offshore non-compliance.

This will look at extending the scope of the offshore penalties regime to align across personal taxes and deter the use of offshore accounts to hide the proceeds of domestic evasion; deterring the deliberate movement of assets to avoid international agreements which tackle offshore non-compliance; and updating the offshore penalties regime to reflect the new global standard of automatic exchange of tax information.

Offshore tax evasion remains a problem for countries and jurisdictions worldwide seeking to plug large budget shortfalls; following the global financial crisis, governments in Europe and the US have made it a key priority to increase transparency and crack down on tax evasion and secrecy.