Last Chance - Do you need to notify HMRC of a Requirement to Correct disclosure before 30 September 2018?

Last Chance – Do you need to notify HMRC of a Requirement to Correct disclosure before 30 September 2018?

Mon 24 Sep 2018

Less than a week to go before the Requirement to Correct (RTC) deadline of 30 September 2018 elapses. RTC requires taxpayers to make a disclosure of any undeclared tax (Income Tax, Capital Gains Tax and Inheritance Tax) arising before the 6 April 2017 from offshore matters or transfers.

The 30 September is also a significant date for the Common Reporting Standards (CRS), as HM Revenue and Customs and other Tax Authorities are to annually exchange, providing and receiving details of overseas banks account held by their respective taxpayers. HMRC is already armed with some data, which it received last year on 30 September 2017 from nearly 50 countries, in respect of overseas bank accounts that existed in the period 1 January 2016 to 31 December 2016. However, the data HMRC will receive on the 30 September 2018 will be far more significant and wide ranging, as 100 countries are going to provide overseas bank account information covering the period 1 January 2017 to 31 December 2017.

HMRC believes that the data it already has along with the data that it is to shortly receive will enable HMRC to identify taxpayers who have not disclosed all of their overseas income and gains. Anyone with an undisclosed overseas bank account is likely to find themselves exposed to an intrusive and wide ranging investigation, where any understated tax is likely to incur substantial penalties ranging from 100% to 300% of the tax understated plus a 10% Asset based penalty. Those who are found to have deliberately understated their tax liabilities could also be “named and shamed” if the tax involved exceeds £25,000.

Some overseas bank account holders may take the view the risk is low as the bank interest they have received has already been taxed by the Overseas Tax Authority. They would be entitled to “double taxation” relief, which should negate any UK tax liabilities. However as part of its investigations, HMRC is inclined to challenge the source of the funds and will try to identify any other overseas assets to establish what might be understated tax.

It is therefore important for anyone with offshore assets of any kind – whether that be a bank account, or an asset, or trust structure or whatever – to seek advice as to whether they need to make a disclosure and if so notify HMRC before the 30 September 2018. In our opinion doing nothing is no longer an option – and could be hazardous. At Mazars we have been working with a number of clients to assess advice previously given. We have also supported individuals and companies, where required, to make disclosures to HMRC. If you have any queries please the Tax Investigations team on 0207 063 4639 or 0161 238 9235.