Tougher penalties are about to kick in for anyone with undeclared offshore tax matters, as part of the Government’s new Requirement to Correct (RTC) legislation. Taxpayers are urged to get their tax affairs in order – before the 30 September 2018 deadline.
RTC was introduced in the last year’s Finance Act and is relevant to all individuals, trustees, partnerships and some non-resident companies who have undeclared offshore tax matters at 5 April 2017. This will include a failure to notify HMRC of any income tax or capital gains tax liabilities, failure to submit an income tax, capital gains tax or inheritance tax return or submission of an incorrect return. The legislation also covers certain situations where UK income, assets or proceeds of sale are transferred overseas. This is of particular significance to non-UK residents with UK assets.
The legislation imposes a strict deadline for taxpayers to correct their tax affairs. Penalties will apply under RTC where a taxpayer had offshore tax non-compliance matters at 5 April 2017 and fails to correct them by 30 September 2018. After that time, taxpayers are likely to face significant penalties.
‘Penalties are charged at 200% (but can be reduced to 100% if the taxpayer discloses the non-compliance and co-operates with HMRC) on the shortfall of tax from the offshore non-compliance. No RTC penalty will be applied if there is a reasonable excuse or the taxpayer has relied on professional advice which is not disqualified. In certain circumstances, HMRC can also charge a separate, asset-based penalty and apply a “name and shame” policy for taxpayers who do not comply.
Who will be affected?
More information about who will be affected can be found here. You can also find some examples about how UK resident and non-UK resident taxpayers will be affected by RTC and what they will need to do next.
You can also contact your local Wilkins Kennedy office, where a member of staff would be happy to help you with any questions you may have relating to RTC.