HMRC should have ‘nudged’ taxpayers in Nov 2017, Blick Rothenberg says

Written by Oliver Wade
21/09/2018

HMRC has recently been sending ‘nudge letters’ to taxpayers who are believed to have offshore assets which may give rise to income and gains attracting UK tax, but leading tax firm Blick Rothenberg questioned whether the revenue has given people enough time to respond.

One of the firms’ dispute resolution partners Fiona Fernie said: “The letters have been in a number of different formats according to whether HMRC has specific information about offshore assets and what the source of that information is. However the thrust of all the letters is the same – if taxpayers have undeclared offshore income and gains which should have been reported for UK tax purposes, it is important that they make a disclosure before 30 September 2018 to avoid the possibility of draconian penalties being imposed under the Requirement to Correct (RTC) legislation.”

The Failure to Correct (FTC) penalties could amount to more than 200% of the underpaid tax and 10% of the value of the asset offshore depending on the circumstances, which could amount to be a very large sum of money, the accounting firm has reported.

Fernie added: “HMRC has indicated that these letters are ‘designed to help’ taxpayers understand their obligations and avoid falling foul of the legislation which was introduced by Finance No 2 Act 2017. Although there is also a leaflet issued by HMRC, it was only issued in August 2018 and has only been circulated this week - so is it too little too late?”

“Whilst those of us in the profession are very familiar with the terms of the RTC legislation, to date there has not been a huge amount of wide-spread ‘advertising’ of the new legislation. There are plenty of taxpayers who are still completely in the dark which is very worrying since the legislation does not just affect those who have deliberately not disclosed offshore income and gains – it also catches those who have failed to disclose such sources completely innocently.”

“This means that the ‘nudge letters’ and the leaflet may be insufficient to ensure that taxpayers review and make any amendments to their tax reporting prior to 30 September. After all, many of the letters we are seeing have been issued in recent weeks - at the height of the holiday period. By the time taxpayers return from vacation and realise that they may have an issue, there may not be enough time left to carry out the necessary review and make a disclosure to HMRC before the deadline.”

Fernie concluded suggesting that it would have been “more helpful” to begin ‘nudging’ taxpayers when The Finance No2 Act 2017 received Royal Assent on 16 November 2017.

    Share Story:

Specialist FTB and BTL markets
Adam Cadle talks to Vida Homeloans director of sales - mortgages Louisa Sedgwick about the specialist first time buyer and buy to let markets

Newsletter

Subscribe to our newsletter to receive breaking news by email.




MoneyAge welcome
MoneyAge Editor Adam Cadle discusses the brand and what is on offer

World Markets (15 minute+ time delay)