We anticipate that the Finance (No.2) Bill will be passed through to Parliament early this Autumn. Much of the Bill is concerned with anti-avoidance measures, and one potentially punitive provision is the requirement on taxpayers to correct any historic 'offshore' tax evasion and non-compliance.
The draft legislation in the Bill introduces a final deadline of 30 September 2018 for those with undisclosed tax liabilities relating to income/gains or assets outside the UK to make a report to HMRC. Thereafter, those with undisclosed tax liabilities relating to 'offshore' matters will be liable to a new set of penalties, much harsher than those currently in force.
Depending on circumstances, the post-30 September 2018 penalties may be as high as 200% of the under-declared tax plus 10% of the value of the relevant asset/s. Unlike most other tax penalties, the new regime will not take into account the cause of a taxpayer's non-compliance, so will apply equally to those who failed to pay tax because of a careless error and those who acted deliberately to avoid their tax obligations.
These measures are perhaps a natural reflection of the information sharing provisions (most significantly FATCA and the Common Reporting Standard) which have been introduced in recent years. It is more apparent than ever, therefore, that anyone with an overseas asset who is unsure as to their UK tax obligations, or perhaps knowingly in arrears, must take action to correct this to avoid stiffer penalties in the longer term.
Our team is experienced in advising on the UK tax position in respect of overseas assets and making appropriate disclosures to HMRC where relevant. Please contact us if you would like to speak to a consultant to discuss any concerns in this area.
