Requirement to correct tax due on overseas assets
The Requirement to Correct (RTC) legislation created a new statutory obligation for taxpayers with undeclared UK tax liabilities that involve offshore matters. The RTC applies to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers relating to offshore tax non-compliance committed before 6 April 2017.
Information that is required to be provided to HMRC under the RTC rules must be provided to HMRC by 30 September 2018. This date coincides with the date when more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS). This data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
Once the deadline ends, any new disclosure will be subject to the new Failure To Correct (FTC) penalties which are more punitive that the existing RTC penalties. Also, taxpayers risk being publicly named and shamed. The FTC standard penalty will start at 200% of any tax liability not disclosed under the RTC and cannot be reduced to less than 100% even with mitigation.
Any taxpayers that are unsure as to whether or not they need to make a disclosure are strongly encouraged to check their tax position. The RTC rules are very complex and we can help review any historic issues and advise and assist with making any necessary disclosures to HMRC. A disclosure can be made using the Worldwide Disclosure Facility or possibly using alternative disclosure methods which may be more suitable. HMRC’s guidance on making a disclosure, deadlines and penalty reductions under the RTC has been updated.
Source: HM Revenue & Customs | 18-07-2018