‘Requirement to Correct’ is fast approaching. Are you sure your clients are not impacted?
Is it possible that your personal clients, trustees or offshore directors may have a UK tax exposure for periods up to 5 April 2016 in connection with overseas matters, including those who have already taken tax advice but may still have liabilities if HMRC successfully challenges the position in the future? Requirement to Correct is highly relevant in these circumstances.
In cases where tax liabilities that have not been corrected by 30 September2018 are subsequently established, the penalties for “Failure to Correct” (FTC) will kick in. 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. The only exception is if someone can provide a reasonable excuse as to why they did not correct before 30 September 2018. The provisions in the legislation specifically disqualifies tax advice received in certain situations.
The level of sanctions are unprecedented for those who fail to correct when required to do so. Penalties will start at 200% of the tax liability (can be reduced but to no lower than 100%). For serious cases, an additional penalty of up to 10% of the value of the relevant asset will also apply, as well as the reputational damage of being ‘named and shamed’ on a public website. These increased sanctions apply not only to individuals in the UK but also to offshore trustees and others.
Join our webinar on Wednesday 29 November where speakers including Derek Scott (Head of Tax Investigations in the UK) and Jason Laity (Chairman, KPMG Channel Islands) will explore the following topics:
Contact Paul Beale to register your place.