HMRC Continue to Target Offshore Tax Liabilities

With a raft of upcoming changes it is more important than ever to consider your tax affairs and ensure they are up to date.

Matters concerning undisclosed offshore tax liabilities need to be considered by 30 September 2018 under the Requirement to Correct (RTC) legislation. This applies to any undisclosed offshore tax liabilities as of 5 April 2017. This legislation pre-empts the upcoming Common Reporting Standard (CRS) where by HM Revenue & Customs (HMRC) will have access to financial information from over 100 countries.

Any outstanding liabilities declared and brought up to date with HMRC on or before 30 September 2018 will be dealt with under the current penalty regime, whereas any subsequent disclosures will be subject to the new stricter Failure to Correct penalty regime with penalties up to 200% of the outstanding tax regardless of whether or not there is any deliberate actions. Further penalties based on the value of the asset can also be charged under these rules where the tax due is greater than £25,000 or where the asset was deliberately moved to avoid the CRS.

In addition to the above, HMRC are currently in the process of extending the time limit for investigating non-deliberate undisclosed offshore matters from a maximum of 6 years to 12 years. This increase applies even where “reasonable care” has been taken in respect of offshore matters. Deliberate offshore tax avoidance will continue to be limited to a maximum of 20 years.

This extension to the current rules is to be enacted as part of the Finance Bill 2018-19. However the extended period will not apply to matters where the income was correctly reported under the CRS and HMRC could reasonably have been expected to raise an assessment during the current time limits.

The RTC rules are the final chance for offshore tax liabilities to be disclosed to HMRC and tax affairs to be brought up to date before the introduction of the higher penalty regime.

If you have any concerns regarding offshore tax matters, want a tax health check or help making a disclosure, please contact us for a free initial consultation on 01892 507288.