9 April 2018


New legislation introduced by the UK government will see anyone with undeclared offshore tax matters face hefty fines if they do not correct their tax affairs – and the deadline is coming up.

The Requirement to Correct (RTC) legislation was introduced in the Finance No 2 Act 2017 and applies to any taxpayers who have undeclared offshore tax matters as at 5 April 2017. It will affect anyone who has either incorrectly declared or failed to complete a tax return to account for the tax liability on any assets or income sources outside of the UK. It can also affect anyone who has failed to declare UK income, assets or proceeds from the sale of assets which have been transferred outside the UK.

The deadline to correct these tax matters is 30 September 2018 and non-compliance could lead to strict fines.

Penalties are charged at 200% on the shortfall of tax from the offshore non-compliance, but can be reduced to 100% if the taxpayer discloses the non-compliance and co-operates with HMRC. No RTC penalty will be applied if there is a reasonable excuse, or if the taxpayer has relied on professional advice which is not disqualified. HMRC (Her Majesty’s Revenue and Customs) can also charge an asset-based penalty of 10% of the value of the asset if the tax under declared exceeds £25,000. HMRC will also have the power to name and shame non-compliant taxpayers.

Peter Goodman, personal tax Partner and international tax specialist at Wilkins Kennedy, said: “RTC relates to offshore tax non-compliance involving any offshore matter or an offshore transfer that has occurred before 5 April 2017. The new legislation applies regardless of whether the previous omission or error was careless, a mistake or deliberate. If a person has any doubt concerning a UK tax liability relating to offshore matters then it is important that a review is carried out as soon as practicable.”

WK Corporate Finance
WK Financial Planning
WK Cashflow