If you have received taxable overseas income, in any form, be sure not to miss the fast approaching Requirement to Correct deadline of 30 September 2018
In recent months, many taxpayers – and agents acting for private clients – will have received letters from HMRC about overseas income and the ‘requirement to correct’ (RTC).
We very recently published a post on exactly this topic, but as we have recently been made aware of the fact that HMRC are likely to levy HUGE penalties for failure to meet these deadlines and for non-compliance with this legislation, we thought it important to re-stress that there are now less than 10 days left in which to comply.
Penalties levied will be not only for the original ‘mistake’, but also for the failure to correct on time and will be a MINIMUM of 100% of the tax due.
The ICAEW have issued the below article which goes into this in more detail, and if you believe this applies to you we urge you to take action now and delay no further. Advancements in technology mean that any non-compliance WILL be uncovered:
From the ICAEW:
We have referred to the RTC in previous news items. Here we recap on what the RTC is and what the deadlines are, and comment on the HMRC letters and on what action you might take.
What is the requirement to correct?
The RTC is a statutory requirement for any person (including trusts) with undeclared UK tax from overseas income or assets to declare it to HMRC. It was enacted in s67 and Sch 18, Finance (No 2) Act 2017.
The RTC covers income tax, capital gains tax and inheritance tax and requires a person to correct anything which HMRC could lawfully assess as at 6 April 2017. In practice this generally means liabilities for 2015/16 and prior years. Anyone with undeclared UK tax liabilities involving offshore matters or transfers should disclose the information to HMRC by 30 September 2018 or face higher penalties introduced from 1 October 2018.
The higher penalties for failure to correct (FTC) start at 200% of the tax owed but may be mitigated down to 100% with full cooperation and disclosure. Penalties may also be charged for deliberately moving assets between jurisdictions and on the value of the asset where fraud is in point.
Although the statutory deadline for the RTC is 30 September 2018, HMRC has announced non-statutory extended time limits in three specific situations. In essence, these mean that if you have undeclared offshore-related tax and you tell HMRC by 30 September, you will have more time to make the detailed disclosure. The extended time limits depend on the circumstances – see our news item Requirement to correct – extension to 30 September deadline in certain circumstances.
HMRC has published detailed guidance on the RTC and how to make a correction at Requirement to correct tax due on offshore assets.
For the full article and to find out more go to https://ion.icaew.com/taxfaculty/b/weblog/