New legislation has been introduced which requires taxpayers in the UK to declare all of their tax liabilities in relation to offshore assets.
The legislation, known as the Requirement to Correct (RTC), obliges taxpayers to correct any tax non-compliance occurring before 6 April 2017. All UK income tax, capital gains tax (CGT) and inheritance tax (IHT) needs to be disclosed to HMRC by 30 September 2018. Currently, there is no obligation to agree and pay the amount of tax, interest or penalty that may be due.
This deadline is also the date when more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS). This will significantly increase HMRC’s ability to detect offshore tax liabilities.
Failure to disclose the relevant information by the deadline will result in taxpayers being issued new ‘failure to correct’ (FTC) penalties, which are set to be much higher than existing penalties, with the smallest penalty starting at 100% of the tax due.
The RTC applies regardless of the reason behind the non-compliance.
Normal assessing rules apply to non-compliance after 6 April 2017.