HMRC are putting added focus on those who attempt to evade tax by concealing income and assets offshore (i.e. in a territory outside the UK). This includes increasing the size and range of their penalties, and a greater number of prosecutions.
If you are a UK resident for tax, HMRC should be notified of any taxable offshore income received. This includes:
- interest from overseas bank or building society accounts;
- dividends and interest from overseas companies;
- rent from overseas properties;
- wages, benefits or royalties earned outside the UK.
The new Requirement to Correct (RTC) legislation has been introduced in order to request that those with undeclared offshore tax liabilities (relating to income tax, capital gains tax or inheritance tax for the relevant periods) disclose them to HMRC on or before 30 September 2018. This will allow HMRC to take the appropriate action, for example, the collection of tax, interest and any penalties due.
To ensure there is an incentive for people to correct any offshore tax non-compliance, there are increased penalties for any failures to correct (FTC) by that date. The new FTC penalty is likely to be much higher than the existing penalties, with a minimum penalty of 100% of the tax involved.
30 September 2018 has been chosen as the final date for corrections as this is the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS).
CRS 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.