In this article, Johnny Hanna, KPMG Belfast reminds us that HMRC’s Requirement to Correct (RTC) facility, which provides a window of opportunity for individuals, trustees and companies to correct any offshore aspect to their tax affairs, closes on 30 September 2018. Johnny also takes a look at the unprecedented levels of penalties that can apply in cases of non-compliance.
HMRC’s crackdown on offshore tax evasion and non-compliance intensified late in 2017 with the publication of Finance Bill 2017 and the introduction of a new legal obligation for those impacted to correct any issue in relation to their ‘offshore matters’ that has given rise to a UK tax liability. This requirement is described as a ‘Requirement to Correct (RTC)’.
RTC requires taxpayers who have outstanding offshore tax non-compliance as at 5 April 2017, which relates to an offshore matter or offshore transfer that arose on or before 5 April 2017, to correct the position on or before 30 September 2018.
Where tax liabilities that have not been corrected by this date the amounts potentially become penalties, known as ‘Failure to Correct’ (FTC) penalties, under this regime. It is the failure to correct which is penalised, not the original behaviour which led to the tax liability. Consequently FTC penalties could apply to those who are found to have tax liabilities which are due to careless or deliberate behaviour, or even for those who took reasonable care.