Over recent years, HMRC has adopted a zero-tolerance attitude towards offshore tax evasion. It has sent a clear message that the days of any safe havens for tax evaders are numbered.
In December 2016, the government published draft legislation for Finance Bill 2017 and its response to the consultation document Tackling Offshore Tax Evasion: a requirement to correct. The intention is for the legislation to come into force when the bill receives royal assent.
The draft legislation encourages taxpayers to ensure that any undeclared UK tax liabilities in respect of offshore interests are fully disclosed to HMRC.
Taxpayers must comply by 30 September 2018 or face tougher new penalties for their failure to correct if they do not have a reasonable excuse.
HMRC hopes that the simplicity of the requirement to correct will provide an incentive to disclose. It can be used for all types of offshore irregularities – including when they have arisen due to changes in legislation or inadvertent errors when implementing offshore structures.
A key objective of the requirement is to encourage taxpayers with offshore interests engage specialists to review their affairs. The timing is key – it is a final chance to resolve a whole range of historical issues before information is exchanged automatically under the common reporting standard (CRS). Taxpayers with offshore structures can now review their affairs to obtain peace of mind that they were implemented correctly in light of rule changes over the years.
Contact Sue Stephens for further information and advice.