Offshore scheme users face requirement to notify

Contractors can have their say on their incoming requirement to notify the taxman if they use an offshore structure with evasion “characteristics” which its creator failed to declare.

Under proposals published last week, the parties behind such “complex offshore arrangements” structures must inform them to HMRC and provide a list of clients using it.

But if the creator (or promoter) fails to declare the arrangements -- which the Revenue admits are in “many cases” used legitimately, then the responsibility to inform passes to the client.

The client, i.e. the user of the scheme, has their notification acknowledged by being given a unique reference number from HMRC, allowing the arrangement to be identified later on.

But more than that, the users “would be required to enter the reference number on their self-assessment return/into their personal tax account.

“Those who fail to comply with these requirements would incur civil sanctions,” warns the HMRC consultation, which says such sanctions can equate to 10% of the underlying asset.

Taken alongside already announced anti-evasion measures (Autumn Statement 2016’s Requirement To Correct; criminalising evasion and penalising evasion’s enablers), the sanctions represent a “significant toughening” in the government’s stance against offshore evasion.

However there is “still more that could be done”, the consultation adds, referring to the proposed Requirement To Notify which affected parties can respond to until February 27th 2017, including on what evasion “characteristics” should be targeted.

“[RTN] would increase transparency around these arrangements and their usage”, the Revenue says. “[It would let us improve our] ability to assess risk; targeting the non-compliant minority who undercut and disadvantage legitimate businesses, and tackling individuals who misuse the structures to evade tax.”

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