The Association of Taxation Technicians (ATT) is highlighting the need for taxpayers with undeclared UK tax liabilities relating to offshore interests to settle their affairs by 30 September 2018 or face stiff penalties
Under the ‘requirement to correct’ legislation currently going through Parliament, taxpayers who were non-compliant in respect of UK income tax, capital gains tax (CGT) or inheritance tax liabilities relating to offshore interests, income or assets at 5 April 2017 will only have until 30 September 2018 to correct their position.
The requirement to correct was one of the many measures dropped from the Finance Act 2017 due to insufficient time for debate, but has now been reintroduced as Clause 67 and Schedule 18 of the Finance Bill published in September 2017.
Penalties under the requirement to correct range from a minimum of 100% to a maximum of 200% of the tax at stake, and are payable in addition to the actual tax liability. The requirement to correct is a new penalty regime, and imposes much higher penalties than those imposed previously. For example, under the requirement to correct, taxpayers who have been careless (but do not have a reasonable excuse) face a minimum 100 % penalty even where they have co-operated fully with HMRC, ATT points out.
HMRC will also have the power to publicly name and shame affected taxpayers in circumstances where they incur one or more penalties under the requirement to correct and the tax lost exceeds £25,000, or they incur five or more penalties under the requirement to correct.
Yvette Nunn, co-chair of ATT’s technical steering group, said: ‘The ATT fully supports the Government’s commitment to tackling offshore tax non-compliance. In the past this has been achieved by HMRC offering the carrot of incentives for those who came forward and brought their tax affairs into order. The requirement to correct represents a change in approach, threatening taxpayers with the stick of large penalties.
‘The 30 September 2018 deadline imposed by the RTC means that non-compliant taxpayers have less than a year to correct their position. We would encourage all taxpayers with offshore interests to review their affairs as soon as possible with a view to either satisfying themselves that their UK tax position is up to date or making any necessary disclosure to HMRC. Professional advice should be sought where appropriate.’
Report by Pat Sweet
