New “Requirement to Correct” Rules to Affect All Taxpayers
Starting from the 30 September 2018, the new “Requirement to Correct” (RTC) rules come into place, requiring taxpayers to make a disclosure of unpaid tax on assets, income and activities in other countries and transfers from the UK to other countries.
HMRC is encouraging individual taxpayers to make sure that they are aware of these rules, so as to not receive a penalty. From 01 October 2018, the minimum penalty will be 100% of the tax owed and could potentially be much higher.
As there is no minimum income threshold with RTC, anyone with unpaid offshore tax is required to disclose this, meaning that, as an example, taxpayers should check their position if they:
– Rented their own holiday home in another country without declaring income
– Received any offshore bank interest
– Made a gain on sale of an overseas property
Additionally, anyone who moved to the UK from abroad, but has, for example, assets or income from their country of origin, will need to make sure that they have properly declared their tax position.
There have been many examples of HMRC attacking tax avoidance schemes, structures, and undeclared income.
Recently, one film scheme partnership that attracted investment from sports stars such as David Beckham and Wayne Rooney has fallen under HMRC scrutiny. The scheme intended to make use of tax breaks for film production in the UK, allowing investors who backed films to claim tax relief for losses incurred from the production of those films.
HMRC won the appeal against Ingenious Film Partners and can now reclaim over £700m of tax.
Investors received demands from HMRC for immediate payment of multiples of their initial investments, with some now facing potential financial ruin.
Time is running out… the deadline is 30 September 2018.
– Review all of your global assets and income
– All income must be declared to HMRC
– Penalties for non-disclosure are very large