Those with offshore assets are coming under close scrutiny from HMRC, who now have far more access to information about offshore assets.
HM Revenue and Customs is beginning their crack down on those with offshore assets. They are investigating for incorrect tax calculations or non-reporting. This follows the Organisation for Economic Co-operation and Development Common Reporting Standard, which aimed to increase global tax transparency by ensuring exchange of tax information between countries. Consequently HMRC received information about people’s overseas accounts, structures, trusts and investments from more than 100 jurisdictions.
The UK International Tax Compliance (Client Notification) Regulations came into force on 30 September 2016. They placed an obligation on all solicitors, tax advisers and financial advisers to inform all individuals registered with them as clients as at that date who hold offshore assets about the new tax reporting obligations. Naturally this is not easy because those advisors were not necessarily recording that information. Those with such assets may or may not receive such a notification letter.
HMRC is also now using information from overseas banks, insurers and wealth and assets managers to identify individuals who are not paying the correct tax.
What if you think there is a problem for you? HMRC is giving those who have not paid the right amount of tax the opportunity to voluntarily disclose information about their offshore affairs. The advantage of voluntary disclosure is that penalties will be reduced. This facility is available until 30 September 2018. Following that date, offshore affairs can still be disclosed to HMRC, but the terms will not be as favourable.
If you fail to disclose any relevant information to HMRC, then there are 3 sanctions:
- One is they will apply a higher penalty and this may be based on the value of the asset, as well as the tax due.
- The second is they may also open a criminal or civil investigation and bring a criminal prosecution which could result in imprisonment.
- Thirdly they can “name and shame” by publishing your details on the HMRC website.
If you have declared all of your tax liabilities then you do not need to take any further action. However, if you believe that you may need to report any overseas assets or income to HMRC and need help, please click here
to email Eric Wardle, Head of our Trusts and Tax Team or call him on 01604 463110.