Income is considered ‘offshore income’ if it comes from a territory outside the United Kingdom. It includes:
– interest from overseas bank or building society accounts
– dividends and interest from overseas companies
– rent from overseas properties
– wages, benefits, or royalties earned outside the UK
UK taxpayers need to declare offshore income
If you fail to make HM Revenue and Customs (HMRC) aware of your taxable offshore income, then as a UK resident you are breaking the law. For anyone trying to evade tax by hiding assets or income offshore, they should be concerned, as HMRC is getting much tougher on this by increasing the size and range of penalties charged, as well as increasing the number of prosecutions of serious evaders.
Previous advice may be outdated
Laws can change and previous advice you have taken may no longer be valid. There are many taxpayers who have looked for guidance in good faith, only to get into trouble because the advice they received is outdated. Therefore, it is essential that your tax affairs are checked regularly.
Where you normally pay tax
You won’t usually be liable to pay tax on offshore income and gains in the UK if you aren’t a resident, however you must still check your residency status and what is taxable from offshore income.
There are ways to tell HMRC about any untaxed worldwide income
Should there be any worries that you aren’t paying the correct amount of tax, there is the option to use one of HMRC’s disclosure facilities. Upon doing this, you are still required to pay the tax that is legally due in full, alongside any penalties and interest.
HMRC are introducing tougher penalties for offshore evasion and non-compliance
HMRC have introduced the Requirement to Correct (RTC), which is new legislation that drastically increases the penalties for anyone who has not declared tax, or incorrectly declared the amount of tax on their offshore income and gains.
There is nothing to worry about as long as you have declared your taxable income and gains. However, if you haven’t, and HMRC becomes aware of this, you will then be investigated and required to pay the undeclared tax, a penalty of up to double the tax owed, ad could even face a prison sentence.
A higher penalty charge can be avoided by simply making a full disclosure of all undeclared tax liabilities under the Worldwide Disclosure Facility.
If there is any worry then it is essential that you come forward immediately. You will have until 30th September 2018 to correct the issue before tougher penalties are introduced.
A new international agreement is making it harder to evade tax on offshore income
Over 100 countries and jurisdictions are already exchanging data with HMRC regarding information about international investments and financial structures held offshore by UK tax residents.
HMRC is cracking down on those who help others to evade tax offshore
Under new laws, enablers of evasion will also be punished, alongside the evaders themselves. Any enablers face civil penalties, criminal prosecution and public naming.
There’s nothing wrong with having investments overseas
You have nothing to be concerned about so long as you declare all taxable income and gains on your UK tax return. As long as you are certain that your tax affairs are up to date then no further action is required. Should you be unsure, then we highly recommend getting in contact with us.
There has been a rise in legal cases between HMRC and taxpayers, due to HMRC collecting further data from banks and foreign tax authorities in order to send cases to tribunals. This has led to a rise of 43% over 2 years in First Tier Tax (FTT) tribunal cases. There […]
HMRC Seeks to be Preferential Creditor in Insolvencies
Recently announced by the government, there will be a public consultation on plans to make HMRC a secondary preferential creditor for certain tax debts paid by employees and customers on the insolvency of a business. HMRC was once a preferential creditor for certain taxes before 2003, however once the Enterprise […]
Research and Development (R&D) tax relief claims are far higher in recent years than ever before, with an astounding £21.4bn in tax relief claimed overall as confirmed in a report released by HMRC on 27 September 2018. Between 2000-2017, there have been over 240,000 claims made across the UK, with […]
What is Offshore Income Income is considered ‘offshore income’ if it comes from a territory outside the United Kingdom. It includes: – interest from overseas bank or building society accounts – dividends and interest from overseas companies – rent from overseas properties – wages, benefits, or royalties earned outside […]
Created in 1994, The Enterprise Investment Scheme (EIS) is a group of tax reliefs that succeeded the Business Expansion Scheme. It was created as an incentive to have investments in small unquoted companies carrying on a qualifying trade in the UK. The scheme is extremely popular, with £14.2 billion invested […]
Overview The Seed Enterprise Investment Scheme (SEIS) is designed to aid small, early-stage companies to raise equity finance by offering tax reliefs to investors that purchase new share in the companies. It works with the existing Enterprise Investment Scheme (EIS) that offers tax reliefs to investors in higher-risk small companies. […]