You can’t understand why the Requirement to Correct (RTC) regime is so important without understanding the Common Reporting Standard.
The CRS allows for the automatic exchange of tax and information on a global level. That essentially means HMRC will be notified about the foreign assets and investments of UK taxpayers. It’s not yet clear how efficiently HMRC will manage this inundation of information – in the midst of their Making Tax Digital campaign and Brexit concerns, they’re not exactly flooded with time and resources for fishing expeditions at the moment. But it is clear that HMRC are more likely than ever to discover non-compliance, whether the error was a result of ignorance, carelessness or a deliberate attempt to evade taxation.
In the wake of this, the Requirement to Correct regime was introduced. Taxpayers have a statutory obligation to review and correct their historic UK tax position ahead of 30 September 2018 or face financial penalties.
And the financial penalties are severe. Penalties of between 100% and 200% of the underpaid tax, asset based penalties of up to 10% of the asset value, naming and shaming, plus a potential additional penalty if HMRC can show the taxpayer make an attempt to avoid the RTC. Suffice to say, it could be costly.
So if you’re non-domiciled in the UK, a non-resident landlord, a UK taxpayer with foreign financial assets, or have any other overseas connection, you have slightly over three months to review your historic position and make any relevant disclosures.
Offshore compliance can be a sensitive and complex area but don’t leave it too late. We have International Taxation experts at Berg & Williams that can help perform a check of previous submissions or liaise with HMRC on your behalf. Book a free consultation today.