Higher penalties for unpaid tax relating to overseas assets
Taxpayers who know or suspect that they have unpaid tax relating to overseas assets, income or activities need to act before 30 September 2018 to avoid incurring much higher penalties for their non-compliance. HMRC’s “Requirement to Correct” (RTC) obliges taxpayers to make a disclosure of unpaid tax on assets, income and activities in other countries and transfers from the UK to other countries. With the 30 September deadline on the horizon, we urge you to check now whether any of your clients need to make a correction under the RTC and, if so, to help them to come forward. From 1 October 2018, the minimum penalty will be 100% of the tax owed and could be much higher depending on circumstances.
The RTC has no minimum level cut-off point so all those with any unpaid offshore tax will need to make a disclosure. This means, for example, that taxpayers who have simply rented out a holiday home in another country and failed to declare the income should check their position. In addition, those who have moved to the UK from abroad but who have, for example, assets or income, perhaps from family holdings or businesses, in their country of origin may need to make sure that they have properly declared their tax position.
The RTC applies to Income Tax, Capital Gains Tax and Inheritance Tax and we therefore expect it to apply in the main to individual taxpayers. However, companies that pay Income Tax, for example, as non-resident landlords, will also need to ensure they have paid the correct tax and if necessary make a disclosure. Trustees, settlors and beneficiaries of trusts with overseas interests may also need to check whether they have unpaid UK tax liabilities.
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Do you have any unpaid tax relating to overseas asset avoid the penalties and contact our team at Charter Tax today for tax advice.
Disclaimer
The information provided by Charter Tax Consulting Limited is general in nature and does not constitute specific tax advice. Professional advice should be sought before deciding on a course of action, or refraining from a certain action, arising from the above information. Tax legislation changes regularly and information contained herein is provided based on legislation as at 26 February 2018
Taxation planning concerns the application of complex statute and case law to future events. Accordingly, however expert the opinion given, it is always possible that the Courts will take a different view of the application of the law. We undertake to apply reasonable care and skill in the provision of advice. We do not guarantee that tax planning steps will in all circumstances achieve a certain legal effect.
