The countdown is on for taxpayers with undeclared UK tax liabilities relating to offshore interests to correct any historical non-compliance issues by 30th September 2018.
As HMRC begin to up their ante, substantial penalties will be imposed for anyone who fails to comply, posing real and substantial risks to taxpayers.
Passed as part of the 2017 Finance Bill, any previous non- compliance issues must be rectified by 30th September 2018, under new statutory ‘requirement to correct’ legislation, (RTC). This includes correcting any issues relating to UK income tax, capital gains tax (CGT) or inheritance tax liabilities (all relating to offshore interests, income or assets).
‘Failure to correct’ (FTC) within the RTC window means taxpayers will be subject to a range of significant penalties, which exceed any existing sanctions. The consequences of failing to comply could result in fines up to 300% of the original value of the unpaid tax. HMRC will no longer accept ‘errors arising from third party mistakes’, or ‘careless errors’ as sufficient excuses.
The legislation is intended to combat offshore tax non-compliance. Previously, HMRC offered incentives to tax payers who brought their tax affairs into order, but as they toughen up their approach, sanctions are now to be imposed to target the non-compliers.
As a further deterrent, HMRC also reserve the right to publish damaging details of any taxpayers who have incurred five or more penalties as a result of the new legislation, and/or incur one or more penalties where the tax lost exceeds £25,000.
If you have any concerns regarding offshore assets, or potentially undisclosed liabilities, please get in touch with one of our Tax experts.