HMRC tighten disclosure requirements
HMRC are getting noticeably tougher on those who try to evade tax by hiding their assets or income offshore. They are increasing the size and range of penalties charged, and increasing the number of prosecutions of serious evaders.
As part of HMRC’s long-standing battle against offshore tax evasion and non-compliance, Finance (No 2) Act 2017 enacted provisions designed to ‘get taxpayers with undeclared UK tax relating to offshore interests into a compliant position’.
To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018, under the new provisions, known as Requirement to Correct(RTC), there are increased penalties for any failures to correct (FTC) by that date. The new FTC penalty is likely to be much higher than the existing penalties, with a minimum penalty of 100% of the tax involved.
Those with undeclared offshore tax liabilities (relating to income tax, capital gains tax or inheritance tax for the relevant periods) are required to make a disclosure to HMRC on or before 30 September 2018, thus allowing HMRC to take the appropriate action, for example, the collection of tax, interest and any penalties due under the appropriate legislation currently in force.
30 September 2018 was chosen as the final date for corrections as this is the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS). CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
If taxpayers are unsure whether they have undeclared UK tax liabilities that involve offshore matters or transfers, they should check their affairs and, where appropriate, put things right as soon as they can.