Requirement to Correct: time is running out to disclose
‘Requirement to Correct (RTC)’ legislation requires UK taxpayers to ensure that all foreign income and assets, where there may be UK tax to pay, have been correctly declared to HMRC by 30 September 2018.
HMRC will impose very harsh penalties for those who fail to comply with the RTC. So it is vital that anyone who has offshore interests urgently reviews their tax affairs to ensure they are fully compliant.
HMRC will soon be in possession of extensive information on offshore income and assets, obtained predominantly through information sharing with other jurisdictions, which will enable HMRC to identify and address non-compliance.
Who is impacted?
Individuals, trustees, partnerships and companies with offshore interests.
The RTC relates to an offshore matter or offshore transfer which was committed on or before 5 April 2017.
Which taxes are included?
Income Tax, Capital Gains Tax and Inheritance Tax (although all tax liabilities should be brought up to date).
Failure to correct
Those who fail to disclose offshore discrepancies by 30 September 2018 will fall into the ‘Failure to Correct’ regime which brings with it some very harsh penalties.
Penalties for the failure to correct will start at 200% of the tax liability (these can be reduced but to no lower than 100%).
In serious cases, an additional penalty of up to 10% of the value of the relevant asset will apply, and taxpayers may also suffer the reputation damage of being ‘named and shamed’ on a public website.
What do I need to do?
RTC is wide reaching and applies whether the non-compliance is due to deliberate motives or carelessness. For anyone who is not absolutely certain their offshore affairs are compliant, they should review their tax position and make any necessary disclosure or correction to HMRC before 30 September 2018.
How Hawsons can help
Hawsons can assist with performing health checks, preparing outstanding returns, advising on relevant liabilities and assisting with disclosures to HMRC. For more information please get in touch with your usual Hawsons contact.