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Are you sure all offshore aspects of your tax affairs are correct?

Are you sure all offshore aspects of your tax affairs..

Opportunity to correct offshore issues for individuals, trustees and companies before significant change in HMRC approach.


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Requirement to Correct (RTC) provides a window of opportunity for individuals, trustees and companies (e.g. corporate non-UK resident landlords) to correct any offshore aspect to their tax affairs up until 30 September 2018. After this date, there is a substantial increase in the level of penalties for offshore non-compliance. These will apply where someone took reasonable care, as well as careless or deliberate behaviour. In addition, from 30 September 2018 details of offshore bank accounts and other assets from circa 100 countries will be shared automatically with HMRC annually. HMRC will risk assess this data and undertake investigations where appropriate. HMRC highlight that if taxpayers are entirely comfortable their tax affairs are correct, no action is required. If, however, there is any doubt, HMRC are asking everyone with any offshore aspect to their tax affairs to check their position and, if appropriate, to make a disclosure by 30 September 2018.

The taxes RTC applies to are Income Tax, Capital Gains Tax and Inheritance Tax. RTC and the associated penalties for ‘Failure to Correct’ (FTC) apply to any person(s):

  • With historic UK tax liabilities (including if HMRC in the future establish these) relating to offshore issues as at 6 April 2017; and
  • Who fails to correct that non-compliance by 30 September 2018.

There is a step change in HMRC’s approach from 1 October 2018. The level of penalties and sanctions for FTC are unprecedented. Penalties start at 200 percent of the tax due. These penalties can be reduced but to no lower than 10 percent. For serious cases, an additional penalty of up to 10 percent of the value of the relevant asset could also apply, as well as the reputational damage of being 'named and shamed' on HMRC’s website.

The only exception to a FTC penalty if tax is due, is if someone has a reasonable excuse why they did not make the required correction before 30 September 2018. The provisions in the legislation specifically disqualify tax advice received in certain situations as providing someone with a reasonable excuse.

Given the significance of the penalties we are encouraging anyone who could be impacted to take this opportunity to consider their affairs one final time and take all necessary actions required before 30 September 2018.

Further information about RTC is available here. Those who may be impacted by the RTC should consider taking action now, which may include undertaking risk assessments and considering any potential penalty or disclosure positions. If you have any questions, then please get in touch with your usual KPMG Private Client contact.

For further information please contact:

Derek Scott

Greg Limb

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