Presently, where there has been a loss of tax, HMRC has four years to raise a tax assessment or issue a notice of determination if a taxpayer has made a mistake and six years if the taxpayer has been careless. However, it can take HMRC longer to establish the facts about offshore transactions, especially where complex offshore structures are involved. Extending the time limit to 12 years will provide HMRC with more time to determine the correct amount of tax due. The taxes within scope of this measure are income tax, capital gains tax and inheritance tax. HMRC is consulting on the details of the proposals, including whether to extend the proposal to corporation tax.
If this consultation will affect you, please do read the consultation document and provide feedback to help inform the development of policy.
The Extension of offshore time limits consultation is open for comment until 11:45pm on 14 May 2018.
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The Requirement to Correct tax due on offshore assets 12 March 2018
HMRC has introduced new legislation called the Requirement to Correct which means UK taxpayers need to make sure that all their foreign income and assets, where there might be tax to pay, have been declared to HMRC before 30 September 2018 or face new substantially higher penalties. Act now A disclosure or discovery after the Requirement to Correct deadline will be subject to much tougher Failure to Correct penalties. This will be a penalty of 200% of the tax owed, which may be reduced to an absolute minimum penalty of 100% of the tax owed depending on taxpayer cooperation with enquiries and the quality of disclosure. Currently, if you enter the Worldwide Disclosure Facility to disclose historic offshore evasion you would likely pay a penalty of 30% of the tax due. After the 30 September deadline, the average penalty may be around 150% of the tax due. This means, for example, if you owe £10,000 in tax now, your total bill for a disclosure made before the deadline would be around £13,000 plus statutory interest. In comparison, if you wait, a disclosure or discovery after the 1 October could result in a total bill of around £25,000 plus statutory interest. HMRC is beginning to receive an unprecedented amount of information about foreign income and assets under the Common Reporting Standard (CRS) exchange of information. By September 2018, more than 100 jurisdictions will be exchanging data with the UK under the CRS. The CRS data will provide HMRC with information on UK taxpayers’ bank accounts, investments and trusts held around the world. HMRC will use this information to open tax enquiries, issue tougher penalties, and take forward criminal prosecutions against those who avoid paying the tax they owe.
The Requirement to Correct period, from now until 30 September 2018, is the last opportunity to put things right before HMRC receives the CRS data and the new penalties apply.
HMRC has provided two briefing sheets, one for tax agents and one for tax payers, which include further information and useful links:
Requirement to Correct - information for tax agents
Requirement to Correct - information for tax payers
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HMRC Talking Points meetings for Tax Agents 12 March 2018
HMRC has a great variety of ‘Talking Points’ subjects which provide ongoing information, guidance and tips to help you to understand tax issues.
There are a limited number of spaces, so save your place now.
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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