The Window is Closing
Do you have undeclared, or under-declared, UK tax liabilities involving income, or assets, outside the UK?
If so you have one last chance to disclose these to HMRC before a new, and more severe, penalty regime kicks in.
This is known as the Requirement to Correct (RTC) and you must make your declaration before 30 September 2018.
At this time HMRC will have access to lots of data derived from the Common Reporting Standard (CRS), which is being adopted worldwide. The basic penalty will be 200% of the tax due, unless you have registered for the Worldwide Disclosure Facility (“WDF”). In the most serious cases the penalty can increase to 300%, together with a further penalty of 10% of the assets in question and potential ‘naming and shaming’.
The penalties can be mitigated in certain circumstances, but never less than 100% of the tax due, even if the taxpayer discloses voluntarily. Where a taxpayer has not disclosed voluntarily, the penalty will not be reduced to less than 150%. HMRC will give reductions depending on the amount of assistance the taxpayer provides. In order though to obtain the full reduction the taxpayer must give HMRC full details of all offshore assets held and details of anyone, or any entity, who has encouraged, assisted or facilitated the tax evasion.
It is important to stress that, unlike the current penalty regime, the new penalties after this month will focus less on the taxpayer's motives. HMRC's view is that taxpayers will already have committed the original failure and failed to respond to previous publicity and previous disclosure opportunities, such as the Lichtenstein Disclosure Facility (LDF) and now finally have also failed to respond to the RTC legislation.
Furthermore, new legislation within s.166 of the Finance Act 2016 (Appointed Day) Regulations 2017 created a set of new statutory criminal offences that will make it a lot easier for HMRC to criminally prosecute offshore tax evasion cases from October 2018 onwards (i.e. within days of the end of the RTC window). As the offences are statutory offences, they do not require the prosecution to prove ‘dishonest intent’. This could have serious consequences both for individuals, as well as any overseas service provider in relation to the corporate criminal offence.
There is a very limited window of opportunity remaining in which to regularise any outstanding liabilities before taxpayers become subject to these stringent new penalties.
If you need to make a disclosure to HMRC please contact us urgently on the details below.
Partner – Head of Tax
direct dial: 01942 292541
mobile: 07790 840394
direct dial: 01942 292505
mobile: 07730 436070