You may have heard of the Requirement to Correct which has been introduced to combat offshore tax-evasion. But do you understand what this is, and what impact it might have on you?
What’s happening?
The Requirement to Correct obliges any person with with UK tax liabilities in respect of offshore assets at 5 April 2017 to declare those liabilities by 30 September 2018. Failure to comply will result in significant penalties.
In October 2018, H M Revenue & Customs will receive information from more than 100 countries about offshore investments and property held by UK individuals. This information will include names, addresses and dates of birth, together with account balances and receipts.
Clearly this will improve HMRC’s ability to identify and penalise UK taxpayers who have not previously disclosed overseas assets. From 1 October 2018 HMRC can apply penalties of up to 200% of the undisclosed income, capital gains or inheritance tax liabilities. There is also a possibility of asset-based penalties. Although there will be a reduction in penalties for voluntary disclosure after that date, penalties will not be reduced below 100% of the tax unless you have a reasonable excuse.
Under the legislation HMRC can raise assessments and penalties for tax years from 2011/12 onwards, and the time limit for raising these assessments is extended to 5 April 2021.
What can I do?
If you think you may have undisclosed income from offshore assets, such as property, shares or other investments then:
- Firstly, DON’T PANIC! There is still time to make a disclosure by 30 September 2018. Penalties might still be applied but these will be far less than will apply to disclosures after that date.
- Secondly, talk to an adviser. They will be identify whether you have a requirement to correct, talk to you about the next steps and assist you with any necessary disclosure.
If you have any concerns and would like to talk these through please do give me a call or drop me a message, if only to achieve peace of mind!
