Doomsday is looming for taxpayers with overseas income, as the deadline for the UK’s requirement to correct (RTC) fast approaches.
With over 100 jurisdictions signing onto the Common Reporting Standard, HMRC are now more equipped than ever to detect offshore non-compliance.
The ability for all financial information to be exchanged between the UK and international bodies puts HMRC in a much better position to eradicate offshore tax evasion. For those taxpayers who might be affected, they have until the 30th September 2018 to rectify any errors relating to Income Tax, Capital Gains Tax or Inheritance Tax in respect of their pre 5 April 2017 tax position.
In all cases where a penalty applies, there will be a standard penalty of 200% of the tax liability which was not declared to HMRC. It is possible for the penalty to be waived with a reasonable excuse but whereas in the past, penalties can be mitigated because of reliance on tax advice provided by an advisor, this is no longer the case for RTC in the following circumstances below:
• Advice provided by an advisor who had received remuneration in the client’s implementation of a tax avoidance arrangement.
• Advice provided by an advisor without the appropriate expertise. (Advisors with UK legal, tax, or accountancy qualification would be viewed as having appropriate expertise).
• The advice provided did not take into account the client’s circumstances in full.
• The advice was addressed or given to another person.
This represents a change in approach by HMRC as it does not differentiate between a taxpayer who deliberately failed to pay their tax and those who took reasonable care with their tax matters.
What do I need to do?
If you have not already reviewed your offshore matters, even where you’ve taken professional advice, we would suggest that a thorough review is undertaken as soon as possible.
The Sedulo Tax Team can assist in reviewing your offshore affairs to ensure you have met your UK reporting obligations. We can also assist in disclosing any previously undeclared income to HMRC. If you would like to discuss how the Requirement To Correct provisions affect you, please get in touch with David Evans or Darrell Booth.