Press release: Taxpayers with offshore interests at risk of 200% penalties

The Association of Taxation Technicians (ATT) is highlighting the need for taxpayers with undeclared UK tax liabilities relating to offshore interests to settle their affairs by 30 September 2018 or face stiff penalties.

Under the ‘Requirement to correct’ (RTC) legislation currently going through Parliament, taxpayers who were non-compliant in respect of UK income tax, capital gains tax or inheritance tax liabilities relating to offshore interests, income or assets at 5 April 2017 will only have until 30 September 2018 to correct their position.1

Failure to correct the position by the end of September 2018 will result in penalties of up to 200 per cent of the tax at stake. HMRC will also have the power to publicly name and shame affected taxpayers in certain circumstances.2

Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:

“The ATT fully supports the Government’s commitment to tackling offshore tax non-compliance. In the past this has been achieved by HMRC offering the carrot of incentives for those who came forward and brought their tax affairs into order. The RTC represents a change in approach, threatening taxpayers with the stick of large penalties.

“The 30 September 2018 deadline imposed by the RTC means that non-compliant taxpayers have less than a year to correct their position. We would encourage all taxpayers with offshore interests to review their affairs as soon as possible with a view to either satisfying themselves that their UK tax position is up to date or making any necessary disclosure to HMRC. Professional advice should be sought where appropriate.”

Notes for editors

1. The RTC was one of the many measures dropped from the Finance Act 2017 due to insufficient time for debate. It has now been reintroduced as Clause 67 and Schedule 18 of the Finance Bill published in September 2017, which is yet to receive Royal Assent. This press release is based on the legislation set out in that Finance Bill as at 24 October 2017.

The non-compliant behaviours subject to the RTC are:

  • Failure to notify chargeability to income tax or capital gains tax;
  • Failure to make and deliver a return or other document for income tax, capital gains tax or inheritance tax; and
  • Delivering an inaccurate return or other document for income tax capital gains tax and inheritance tax;

where these relate to income, assets or activities located or transferred overseas

2. Penalties under the RTC range from a minimum of 100 per cent to a maximum of 200 per cent of the tax at stake, and are payable in addition to the actual tax liability. The RTC is a new penalty regime, and imposes much higher penalties than those imposed previously.  For example, under the RTC, taxpayers who have been careless (but do not have a reasonable excuse) face a minimum 100 per cent penalty even where they have co-operated fully with HMRC.

HMRC can publish details of taxpayers if:

  • They incur one or more penalties under the RTC and the tax lost exceeds £25,000, or
  • They incur five or more penalties under the RTC.

For more information about how to comply with the planned rules, see here.

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