Brits with offshore interests risk 200% tax penalties
Individuals with undeclared UK tax liabilities relating to offshore interests should settle their affairs by September 30th 2018 or prepare for hefty penalties, a professional tax body warns.
In fact, under a new ‘Requirement To Correct’, people with an imperfect UK tax position from offshore assets as of April 2017 have only about 17 months to rectify it, alerted the ATT.
“Failure to correct the position by the end of September 2018 will result in penalties of up to 200% of the tax at stake,” said the Association of Taxation Technicians (ATT).
“HMRC will also have the power to publicly name and shame affected taxpayers in certain circumstances.”
Although those circumstances are reserved for persistent and heavy offenders (tax loss is over £25k for example), the upshot is that the Revenue is changing tack and hardening its stance.
For example, under the RTC, taxpayers who have been careless (but do not have a reasonable excuse) face a minimum 100% penalty, even where they have cooperated fully with HMRC.
“HMRC[‘s previous] offering [was seen as] the ‘carrot’ of incentives for those who came forward and brought their tax affairs into order,” reflected ATT’s Yvette Nunn.
“The RTC represents a change in approach, threatening taxpayers with the ‘stick’ of large penalties.”
The RTC was one of the many measures dropped from the Finance Act 2017, but it has now been reintroduced as Clause 67 and Schedule 18 of the Finance Bill, published in September.
The “non-compliant” behaviours subject to the RTC are:
- Failure to notify chargeability to income tax or capital gains tax;
- Failure to make and deliver a return or other document for income tax, capital gains tax or inheritance tax; and
- Delivering an inaccurate return or other document for income tax capital gains tax and inheritance tax; where these relate to income, assets or activities located or transferred overseas
“We would encourage all taxpayers with offshore interests to review their affairs as soon as possible with a view to either satisfying themselves that their UK tax position is up to date or making any necessary disclosure to HMRC,” Nunn recommended. “Professional advice should be sought where appropriate.”