New legislation requirement to correct has been introduced by HMRC. Requirement to correct relates to any tax irregularity in respect of any offshore assets, income or gains, however such irregularity may have been caused.
Requirement to correct deadline
For any uncorrected irregularities you must notify HMRC of your desire to correct the irregularity by 30 September 2018. Failure to do so will lead to significant penalties.
The penalty regime is punitive, in that there will be a minimum 200% penalty of the underpaid tax plus a further 50% uplift for any attempt to move assets to other jurisdictions to avoid detection.
In addition, there is a 10% asset-based penalty if the undisclosed tax exceeds £25,000 in any tax year. This can lead to very significant penalties, particularly for relatively small amounts of income which are generated from assets of any value.
The penalties also apply irrespective of how the irregularity arose and there is no distinction between an innocent error of omission and deliberate attempts to hide such income, although there will be some relief where a reasonable excuse can be provided. There are however relatively few instances that HMRC accept as providing a reasonable excuse.
There will be an ability to appeal the penalty through the Tax Tribunals although as yet, of course, we have no idea how the tribunal will view matters and therefore what possible relief against the penalties may be available.
Please note that this Tax facts page is for general information purposes only. You should seek professional advice before you take any action, or refrain from, as a result of information contained herein. Content last updated: 29/6/18.
For more information
For more information and guidance on the new legislation requirement to correct, please call our tax advisory team on: