Offshore tax evasion has been a large problem for the UK. In order to help tackle it, HMRC will be receiving information on bank accounts and financial investments from hundreds of countries that have signed up to the Common Reporting Standard (CRS) – an automatic exchange of information that has been commissioned by the Organisation for Economic Cooperation and Development (OECD).
The CRS comes into force later this year. In the meantime, there is a ‘last chance’ opportunity for taxpayers to disclose any offshore tax evasion activities. So if you have undeclared UK tax liabilities in respect of offshore issues, you now have until 30 September 2018 to correct the situation – or you’ll face tough penalties.
The “Requirement To Correct” (RTC) will apply to undeclared Income tax, Capital Gains Tax (CGT) and Inheritance Tax (IHT) arising from:
- Failing to notify chargeability
- Failing to make a tax return, or to meet an obligation to provide HMRC with other documents
- Errors in tax returns and documents.
Non-compliance under the RTC can be corrected by:
- Filing a return (or an amended return in the case of an error)
- Making a disclosure using one of HMRC’s existing facilities
- Direct discussion with HMRC
- Disclosing information during the course of an enquiry
- Notifying chargeability to income tax or Capital Gains Tax.
Taxpayers falling within the RTC who do not correct their situation by 30 September 2018 will be subject to severe penalties – the minimum being 100% of the tax, with a maximum penalty of 200%. No penalty will be charged if the taxpayer has a reasonable excuse.
There may also be:
- An asset-based penalty of up to 10% of the value of the asset where the tax in any one year was over £25,000.
- Naming and shaming in the most serious cases and where over £25,000 per investigation is involved.
- Enhanced penalties of 50% of the amount of the standard penalty if assets or funds are moved in an attempt to avoid the RTC.
Voluntary disclosures should always be made sooner rather than later. If you would like us to review your affairs to help correct your tax situation and avoid future fines, please get in touch with our Tax Specialist Denise on 020 8530 0720. Or email firstname.lastname@example.org.