Undeclared offshore tax liabilities and information exchanges
Under the new Requirement to Correct rules, taxpayers are required to disclose any undeclared offshore tax liabilities relating to income tax, capital gains tax or inheritance tax to HMRC before 30th September 2018.
The 30th September 2018 has been chosen as the final date for disclosure as this is the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard.
The standard penalty for failure to make the disclosure is a maximum of 200% and a minimum of 100% of the tax due that is attributable to the offshore non-compliance. A further additional penalty of up to 10% of the assets connected to the failure to notify will apply where the tax involved exceeds £25,000.
These penalties can be increased by a further 50% where assets have been moved to prevent or delay HMRC from discovering a loss of tax. HMRC can publish details of serious defaulters where the lost tax exceeds £25,000.
Taxpayers should review their position and, if necessary, seek advice to rectify their situation before they become liable for the new penalties.