Individuals, companies and trusts have just six months left to report and correct any ‘offshore matters’ that have given rise to a UK tax liability before facing significant penalties.
REQUIREMENT TO CORRECT – THE NEW RULE
A new rule, known as Requirement to Correct (RTC), has been introduced requiring those with undeclared offshore tax liabilities relating to a matter prior to 5 April 2017 to disclose these to HMRC before 30 September 2018.
The relevant taxes included under RTC are Income Tax, Capital Gains Tax and Inheritance Tax.
For those who fail to correct, the penalty applied will be set at 200% of the undisclosed tax liability. This could potentially be mitigated down to 100% but this is the minimum penalty. In addition, if the behaviour is deemed deliberate, a tax-geared penalty could also be applied and potential naming and shaming by HMRC.
IS THIS REALLY IT?
Various disclosure facilities have been offered by HMRC over the years, however, this appears to be the final chance.
The main reason for this final stop date is that by then HMRC will be sharing information with over 100 countries and will, therefore, be able to more easily detect offshore non-compliance.
Prior to this, detection was much more difficult and so the ‘carrot’ approach of amnesties with the promise of immunity from prosecution (in some cases) and reduced penalties was taken.
If you have any concerns or questions as to whether you may need to make a disclosure, please get in touch with a member of our tax team.