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Requirement to Correct (RTC) goes live on 1 October 2018.

In advance of the above, HMRC appears to have begun writing to UK resident non domiciled (RND) taxpayers who have claimed the Remittance Basis of taxation. These ‘prompt’ letters provide details in relation to the RTC deadline (30 September 2018) and the ramifications if UK tax remains due on overseas income or gains post the deadline’s expiration.

Within the body of the letter HMRC provides some examples of likely sources of potentially untaxed offshore income and gains. These include:

  • Overseas bank accounts
  • Bank deposits and loans
  • Stocks and shares – disposals and also dividends received
  • Rental income from land and buildings (such as holiday timeshares)
  • Disposal of assets – such as art, antiques, jewellery, property
  • Incorrect claims for Overseas Workday Relief
  • Incorrect claims for Foreign tax Credit relief
  • UK income transferred abroad which has not been taxed
  • Undeclared taxable remittances to the UK.

New Penalty rates

HMRC states that from 1 October 2018, they will charge “much higher penalties”. HMRC then goes on to say that the penalty will be 200% of the tax due, however HMRC can reduce the penalty based on the level of co-operation and the quality of the disclosure.

Finally HMRC confirm that they will be receiving new financial information from more than 100 jurisdictions, under the terms of the Common Reporting Standard. The information they will receive will include details about:

  • Non-UK bank accounts
  • Structures
  • Trusts
  • Investments.

What you should do now

Time is short, not least because if liabilities are identified, then you must register an intention to disclose under either the Worldwide Disclosure Facility (WDF) or Contractual Disclosure Facility (CDF) before midnight on 30 September 2018 (24 September if phone is your preferred method of communication). In our experience it can take time to obtain the relevant papers and documents to identify if a disclosure is required or not.

Please note that the best course of action available to you is to seek the advice of a person with the appropriate expertise but who was not involved with the original advice/transaction. Provided that the further advice takes account of all your relevant circumstances and you follow the advice, you will have a reasonable excuse if it is later found that you should have made a correction.

Edwin Coe’s thoughts

Given the exceedingly short period of time available and the fact that HMRC has only just started writing to taxpayers, Edwin Coe believes that HMRC should seriously consider a deferral of the current 1 October go live date. 1 January 2019 would seem a much more appropriate timeframe for taxpayers to properly understand the ramifications of the RTC legislation and engage with suitably qualified advisors to review the position.

Edwin Coe’s team

Edwin Coe has a market-leading team of ex-HMRC investigators, CTA qualified tax advisors and lawyers. We are ideally placed to act promptly and confidentially to assist taxpayers who want to understand if they need to make a disclosure before the current RTC deadline expires. We have many combined years of experience resolving non-UK related tax issues with HMRC.

Please email or pick up the phone to any of the team to discuss what action is required.

For further information regarding this topic, please contact Frank Strachan, Head of Tax, or any member of the Edwin Coe Tax team.

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing. This guide concerns the law in England and Wales and is intended for general guidance purposes only. It is essential to take specific legal advice before taking any action.

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