The UK introduced legislation in late 2017 called ‘Requirement to Correct’ (RTC). In summary, if you do not correct an historic UK tax error before 30 September 2018, and the UK tax authorities (HMRC) later discover the mistake (e.g. through information received under the Common Reporting Standards sharing regime); there will be crippling penalties (200% of the tax plus 10% of the value of any related assets) and HMRC may publish your details on their website, which is watched by the media.
The UK’s tax system has far-reaching tentacles so if you (in whatever capacity you are acting) have any connection to the UK, you should check the position carefully, and soon, just to make sure that nothing has been missed. If it turns out that there has been a mistake, it is possible to limit your exposure to just the tax missed plus any interest (i.e. no penalties).
Individuals
Trustees (or equivalent)
Companies
If you are entirely confident that you have complied with all your UK tax-reporting obligations, you do not need to worry (perhaps make a note on your files that you considered RTC but felt there was no need to act further).
However, if you are at all uncertain, then you should seek advice from someone who can review your position and let you know where you stand.
One of the most unusual aspects to the RTC legislation is that you are generally not able to rely on the fact you took tax advice in the first place. While this may seem nonsensical, it can be solved by receiving a second opinion now, which you are allowed to rely on if HMRC successfully challenge your historic actions.
For those who actively flaunt the rules, when eventually caught, no one will be able to defend or protect them from very harsh penalties, including prison. However, although the vast majority of people we know try to get things right, sometimes there are mistakes.
Time is not on our side – September 2018.
Since 6 April 2017, the UK’s Inheritance Tax regime is much wider than before so be very careful where you (any of the three above) hold an interest in UK residential property, either directly or indirectly. This includes a loan to anyone who spends the money on UK residential property in any way as well as any collateral that you provide to facilitate any such loans. We have recently seen an example where the overall charge can be 120% of the property value.
If you do not have a UK tax advisor or if a change in UK tax advisor is required, or you would like to know more about the above, it would be a pleasure to speak to you. Please email James Walker with the subject ‘RTC’ and we can arrange a mutually convenient time for a call.
We see the Tax Return as a window into our client’s life and the best way for us to get to know each other very well. We aim to see that the right amount is paid at the right time on the basis of full, accurate and timely disclosure.
We assume a role somewhere between trusted advisor and knowledgeable friend – a role vital in ensuring clients are able to keep and enjoy more of what they earn and bequeath it to the next generation.
UK tax is constantly changing and you will have events that require tax planning (e.g. a possible investment into a business or sale of an asset) while also having ideas of how you would like to use your wealth to benefit you and your family (e.g. via gifts or the creation of trusts).
We aim to ensure that you make the most of the tax legislation, while being cautious and reasonable in our approach to tax planning.
Foreign domiciled UK residents have access to some very beneficial tax rules but those benefits come with complexity, which is ever increasing. We help those who are yet to come to the UK, are already here or those who have left to ensure that they make the most of the available rules.
For anyone outside the UK who owns UK real estate (including non-UK companies), we help them with their ongoing tax compliance and any related tax planning.
If you’re a US citizen living in the UK or you’re planning to move here, there will be a number of important life stages that you will need to plan for. Our dual-qualified US and UK tax experts have an intricate understanding of both systems. Tell us your story and together we’ll assess your liabilities and tackle any issues before they become an issue.