From 1 October 2018, HMRC will be gaining access to information from tax havens that will enable it to identify UK citizens with undisclosed offshore assets, and by inference, undisclosed UK income and taxable gains. Why does this matter?
It matters because HMRC has introduced new legislation called the Requirement to Correct which will dramatically increase the penalties for people who have not declared tax or declared the wrong amount of tax on their offshore income and gains.
If you have declared your taxable income and gains, then you have nothing to worry about, but if you haven’t, and HMRC finds out, you could face an investigation and be required to pay the undeclared tax, plus a penalty of up to double the tax you owe - with a minimum penalty of 5% of tax owed.
You can avoid being charged the higher penalties by making a full disclosure of all undeclared tax liabilities under existing disclosure facilities.
Offshore income sources that should be declared include:
- interest from overseas bank or building society accounts,
- dividends and interest from overseas companies,
- rent from overseas properties, and
- wages, benefits or royalties earned outside the UK.
If you are concerned, now is the time to come forward. You have until 30 September 2018 to correct matters before the tougher new penalties are introduced.
Tax payers who are uncertain if they are affected are advised to call and seek guidance.