Friday, 23 February 2018

Offshore matters or transfers, disclosure for UK tax and the new failure to correct penalty from 1 October 2018

Following my blog "UK tax compliance and HMRC Campaigns", I am focusing here on offshore involvements and UK tax. 

If you have, or have had involvements offshore, are you happy that these affairs have been correctly disclosed and taxed in the UK?

There is a new legal requirement included at Section 67 and Schedule 18 of the Finance (No. 2) Act 2017 that creates an obligation for anyone who has undeclared UK tax liabilities involving offshore matters or transfers to disclose the relevant information about this non-compliance to HM Revenue and Customs (HMRC) by 30 September 2018.

Failure to disclose the relevant information to HMRC on or before 30 September 2018 will result in the person becoming liable to a new penalty as a result of their failure to correct (FTC). The new FTC penalty is likely to be much higher than the existing penalties, with a minimum penalty of 100% of the tax involved.

To avoid becoming liable to these new higher penalties, a person must correct the position by no later than 30 September 2018. If they do this, the tax and interest will be collected and the existing penalty rules will apply.

HMRC has previously run campaigns specifically aimed at tax payers with overseas affairs who may not have made correct disclosure and/or paid enough tax in the UK. These campaigns are now over, but anybody wanting to make a tax disclosure voluntarily about any area of UK tax can still make a disclosure by using the Campaign Voluntary Disclosure Helpline on 0300 123 1078 - Monday to Friday, 8 am to 6:30 pm.

If taxpayers are unsure whether they have undeclared UK tax liabilities that involve offshore matters or transfers, they should check their affairs and if necessary put things right before they become liable to the new FTC penalties that will come into force on 1 October 2018.

Further guidance on this is available from HMRC here