Loading…

Requirement to Correct – Last chance saloon.

Taxpayers have until 30 September 2018 under the Requirement to Correct legislation to register their intention to disclose outstanding UK tax, connected to non-compliance involving offshore interests, as at 5 April 2017.

About the author

Mark Taylor

+44 (0)20 7556 1243
taylorm@buzzacott.co.uk

Non-compliance means failure to notify, failure to deliver returns or other documents and the delivery of an inaccurate return or other document and applies to Income Tax, Inheritance Tax and Capital Gains Tax.

Taxpayers who do not correct on or before 30 September 2018 face draconian “Failure to Correct” (FTC) penalties. A typical ‘offshore’ case will currently attract a penalty of approximately 30% or 40%. In a standard FTC case, the FTC penalty will start at 200% of the offshore tax involved but can be reduced to reflect the quality of the disclosure, but not below a minimum of 100% of tax involved for an unprompted disclosure or 150% for a prompted disclosure. In serious cases, HMRC also has the power to charge a further 10% on top of the value of the asset or, where assets were moved, a further 50% of the standard FTC penalty.

HMRC also has the power to extend the current assessment time limits thus preventing years falling out of time in cases where people do not come forward. While there is no FTC penalty if a taxpayer has a reasonable excuse for not correcting, a reasonable excuse does not include relying on advice given by a person who:

  • did not have appropriate expertise;
  • failed to take account of all the taxpayer’s individual circumstances (so far as relevant to the matters to which the advice relates); or
  • addressed it to, or gave it to, another person

For “avoidance arrangements” reliance on advice from an “interested person”, a person who participated in the relevant arrangement or facilitated the taxpayer entering it, is not a reasonable excuse.

The 30 September 2018 Requirement to Correct deadline has been chosen to match with the date HMRC will begin to receive the full Common Reporting Standard (CRS) information. Over 100 jurisdictions have agreed to automatically share information on financial accounts under the CRS. The first exchange of information took place in September 2017.

After 30 September 2018, HMRC will receive information about:

  • overseas accounts
  • insurance products
  • other investments, including those held through overseas structures such as companies and trusts.

This includes details of the account holder or owner, including:

  • name
  • address
  • date of birth
  • balance of the account
  • payments into the account

Buzzacott’s Head of Tax Investigations and Dispute Resolution, Mark Taylor gave his view on this case.

"The message is clear. You must correct any offshore non-compliance by 30 September 2018. To date, HMRC has collected £2.9billion in additional tax, interest and penalties from its international agreements and disclosure facilities and with further information to be shared under the CRS, HMRC will identify and challenge and FTC cases. The FTC assessment and penalty powers will see the £2.9billion collected figure rise substantially".

"If you receive income from a source in a territory outside the UK, hold assets in a territory outside the UK, carry on activities wholly or mainly in a territory outside the UK or have received or transferred abroad amounts before 6 April 2017, you should immediately seek advice from a specialist who can review your position and let you know where you stand".

For further information about the Requirement to Correct, please speak to your usual Buzzacott contact or Mark Taylor on 0207 556 1243. To leave an enquiry, please complete the form below:  

Note: all fields are subject to a 255 character limit.

Please complete all required fields above.
You might also be interested in… Tax investigations and resolving disputes.

Guidance from start to resolution

Our service is designed to tailor a strategy to suit your unique needs for reaching resolution with HMRC as quickly and cost-effectively as possible. Our team of tax experts include ex-HMRC Senior Investigators and Inspectors who understand HMRC’s mind-set and can handle any investigation or disclosure for you directly and support you at every stage of the process. 

If your case involves other advisors – such as solicitors or accountants – it’s no problem to mesh our services with theirs. We regularly join forces with other firms to support our clients. We are about easing the process and reaching the best outcome, whilst always complying with tax regulations and legislation.

Our clients have told us that we deliver on our promises, provide honest, open and regular communication that is easy to understand and take an active interest in their case.

Whatever business or industry you’re in, whatever the tax issue may be, you’ll get clear relevant guidance at a fair price agreed upfront. We value our clients and we pride ourselves for always being honest and upfront at all times. 

Specialists in tax investigation and resolving disputes

Download these useful resources:
Buzzacott Tax Investigations and Dispute Resolution brochure

What do our clients say?
Find out what our clients have to say when using Buzzacott's Tax Investigations and Dispute Resolution team
here.