Taxpayers only have a few weeks to disclose undeclared offshore tax liabilities to HMRC or risk a stiff penalty, the Chartered Institute of Taxation (CIOT) has warned.
The institute has urged individuals who need to make a disclosure, or are unsure about making a disclosure, to act before the deadline, 30 September.
The Requirement to Correct requires individuals with undeclared offshore tax liabilities relating to income tax, capital gains and inheritance tax to disclose them to HMRC on or before 30 September 2018. The revenue’s guidance provides individuals with information and examples about who has a Requirement to Correct, when a correction must be made, which tax years are in scope and what the penalties are for those who do not comply.
Furthermore, the guidance provides individuals with details of HMRC’s policy regarding penalties for taxpayers who notify the revenue that they have something to disclose either on or very close to the deadline.
The penalties for failing to correct offshore non-compliance by the end of September are much more severe than existing penalties, at a maximum 200 per cent of the tax involved, with a minimum penalty of 100 per cent of the tax involved.
Commenting, CIOT management of taxes sub-committee chair Chris Davidson said: “Tax rules relating to offshore matters can be complicated and anyone who is unsure if they have any undeclared offshore tax liabilities should check their position and, if necessary, take advice from a tax professional. Anyone who has taken advice in the past about an offshore matter should consider if they need to re-visit this advice and, if necessary, obtain a second opinion.
“Ultimately, it is the taxpayer’s responsibility to check whether they need to make a disclosure under the Requirement to Correct or not, and with the deadline approaching fast, time is running out to act.”
The deadline of 30 September 2018 coincides with the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS).
“HMRC will soon be receiving a huge amount of information from other tax jurisdictions and we have been left in no doubt that they will use it to launch investigations and, in some cases, criminal prosecutions against individuals who have not made a correct and complete declaration of their offshore income and assets to the UK tax authority. The days of HMRC being ‘in the dark’ about UK taxpayers’ offshore bank accounts and other interests are over. This makes it all the more pressing that taxpayers check their positions now to ensure that they minimise their risk of receiving a penalty for failing to correct, or worse, put themselves at risk of a criminal prosecution,” Davidson concluded.
Subscribe to our newsletter to receive breaking news by email.