UK taxpayers who receive any foreign income or profits from offshore assets have been urged to contact HMRC and disclose this income before 30th September 2018 to avoid being hit by higher penalties.
David Redfern, tax preparation specialist and director of DSR Tax Claims, warned those affected to contact HMRC as soon as possible to ensure that they stay the right side of HMRC’s new legislation.
HMRC’s new “Requirement to Correct” legislation, which comes into effect on 30th September, requires UK taxpayers to inform HMRC if they are liable to pay any Income Tax, Capital Gains Tax or Inheritance Tax on offshore assets.
Redfern stated that “people might see the word ‘offshore’ and believe that it only applies to wealthy taxpayers with offshore bank accounts or investments, but even if your overseas income is less significant – maybe a holiday home from which you receive rental income – this legislation also applies to you.
If you receive any income from overseas, however small, you need to ensure that your tax affairs are in order before the Requirement to Correct legislation comes into play”.
Redfern added that those who are tempted to ignore HMRC’s warnings do so at their own peril, due to changes in worldwide financial reporting which come into play on 1st October 2018. The Common Reporting Standard, covering at least 100 countries worldwide, will make it easier for the UK to exchange financial account data.
Redfern noted that “those people who think they will get away with it because HMRC will never find out might find themselves receiving quite a shock after the Common Reporting Standard goes live – it will be easier than ever for HMRC to detect any UK taxpayers who are evading their tax responsibilities”.
Those who believe that they have liabilities to disclose are advised to contact HMRC prior to the 30th September deadline, with Redfern stating that “in this as with all tax situations, the sooner you make HMRC aware of any issues, the better. If you are sure that your overseas tax affairs are already in order then you needn’t worry – however, if you don’t know whether this legislation applies to your foreign income, you need to seek professional tax advice as early as possible to avoid coming into conflict with this new legislation”.
UK taxpayers who make a declaration to HMRC regarding offshore income by 30th September then have 90 days in which to make a full disclosure and pay any additional tax required of them.