New offshore tax penalties
New legislation that comes into effect from 1 October 2018 will see higher penalties for anyone with undeclared offshore assets. HMRC has published a news release urging taxpayers with undeclared offshore assets to become compliant and warning taxpayers that they will prosecute the most serious cases of tax evasion. These new penalties are part of HMRC’s plans to target overseas tax avoidance.From 1 October 2018, any new disclosure will be subject to the new failure to correct (FTC) penalties which are more punitive that the existing penalties. The new regime will also mean that some taxpayers can be publicly named and shamed. The FTC standard penalty will start at 200% of any undisclosed tax liability and cannot be reduced to less than 100% even with mitigation.HMRC is clear that any taxpayers with offshore assets that are already compliant have nothing to worry about. However, any taxpayers that are unsure as to whether or not they need to make a disclosure are strongly encouraged to check their tax position to ensure they are fully compliant and have paid the correct amount of tax due. Planning noteSome taxpayers may not realise that they must declare their overseas income to HMRC if, for example, they have worked overseas or are receiving income from a rental property outside the UK. HMRC has also published a consultation looking at implementing a new minimum time limit of 12 years for HMRC to assess offshore tax. We can help review any historic issues and advise and assist with making any necessary disclosures to HMRC.