New legislation has introduced a legal requirement for UK taxpayers who have undisclosed UK tax liabilities to income tax, capital gains tax and inheritance tax in respect of offshore matters to disclose the relevant information to HMRC by 30 September 2018. This is known as the Requirement to Correct (RTC).
The penalties for failure to correct (FTC) start at 200% mitigated to a minimum of 100% of the tax. There can also be asset-based penalties in more serious cases.
With effect from 1 October 2018, the Common Reporting Standard will be introduced under which 100 jurisdictions will exchange financial account information on residents’ investments offshore hence the need to report any undisclosed liabilities by the 30 September 2018.
When the legislation was first drafted it was thought it was intended to target deliberate tax evasion, such as routing undeclared UK income through off shore structures. However over the course of the last few months it has become clear that HMRC will be taking a more aggressive approach even in cases where an innocent error has occured.
In brief, a person must correct any offshore tax non-compliance, including failure to notify chargeability to tax or failure to submit a Return that should have been submitted.
The RTC covers tax years as far back as 2013/14 if a failure has occurred but the taxpayer has taken reasonable care, back to 2011/12 if behaviour was careless and back to 1997/98 if the behaviour is deliberate.
If you have any assets overseas, for example holiday homes, letting income, bank interest, then Pierce can help you prepare for the new legislation.
For further information, please contact Anne Wilson on firstname.lastname@example.org or call 01254 688 100.