Even those who have taken reasonable care can be impacted by RTC. The deadline is approaching for reviewing and correcting offshore issues.
We are aware that HMRC have written to select groups of individual taxpayers in advance of the 30 September 2018 deadline for the new Requirement to Correct (RTC) rules. In these letters, HMRC suggest what information should be submitted in order to protect from RTC penalties and allow very little time within which to provide this. In our view, the large amounts of information requested might be excessive (on a case by case basis). However, with the deadline nearly upon us, uncertainty still remains around the nature and level of information taxpayers are being asked to provide, especially for open years where there is an ongoing HMRC enquiry (in particular, what constitutes a ‘correction’). We have written to HMRC seeking clarification.
RTC can apply to any offshore aspect of a taxpayers tax affairs, and importantly will apply where someone took reasonable care, as well as to careless or deliberate behaviour. The substantial level of penalties that HMRC will be able to charge under this new legislation will very soon be impacting those with unresolved UK tax issues arising from offshore assets, including the unsuspecting taxpayer who has not checked.
RTC provides a window of opportunity for individuals, trustees and companies (e.g. corporate non-UK resident landlords) to correct any offshore aspect to their tax affairs up until 30 September 2018. After this date, there is a substantial increase in the level of penalties for offshore non-compliance.
These new measures require those who have outstanding UK tax liabilities that involve offshore non-compliance as at 5 April 2017 to correct the position on or before 30 September 2018. This will apply to income tax, capital gains tax and inheritance tax. The Failure to Correct penalties are higher than those ever previously imposed by HMRC, with a standard penalty of 200 percent of the tax liability, which may be lowered but not below 100 percent. The sole defence against these penalties is one of reasonable excuse.
Together with the Associate Director of the Fraud Investigation Service at HMRC, we co-presented a webinar hosted by Thomson Reuters which discusses RTC. You can listen to the webinar here.
Key topics discussed on the webinar include:
If you have any concerns regarding the impact that the RTC legislation may have in respect of your UK tax affairs then you should take action now and seek advice. This may include for example undertaking risk assessments and considering any potential penalty or disclosure positions. If you have any questions, then please get in touch with your usual KPMG Private Client contact.