UK disclosure and dealing with HM Revenue & Customs
We have experience assisting taxpayers whose UK tax filings are delinquent or have been previously incomplete, particularly as it relates to international tax affairs. In some cases there will be a disclosure program that is available to you which can mitigate penalties and provide a structured route forward. Since 30 September 2016 this has included the Worldwide Disclosure Facility. Otherwise alternative routes are required to bring your affairs up to date and make disclosure first before discovery occurs.
The Finance (No. 2) Act 2017 introduced new penalties for UK taxpayers who did not disclose their offshore non-compliance, in tax years up to and including 2015/16, by 30 September 2018. This legislation was known at the time as the Requirement To Correct, with the penalties for disclosure after that date referred to as Failure To Correct penalties. In many cases these penalties will be 100-200% of the tax due and can in certain cases include 10% of the asset. These changes are driven by HMRC’s belief they are now receiving substantial financial information directly from foreign jurisdictions, including the US. Whether omissions are inadvertent or not we can help you find the best way forward.
Additionally, Finance bill 2019 is expected to extend the time limits for HMRC to open assessments into offshore non-compliance to 12 years following the end of the tax year. As drafted currently this will be somewhat retroactively in that it applies from 2013/14 tax year in the case of a careless omission and 2015/16 for innocent mistakes.
In recent years we have completed projects disclosing complex offshore trust structures, offshore accounts and remittances of large sums into the UK, co-ordinating with HMRC in an appropriate manner. Sometimes the omission might be small, a simple bank account, or it might be a misunderstanding of the tax treatment in the UK of a trust compared to the US where it is founded.
Our experience also includes handling HMRC checks and enquiries into tax returns which can often be the first time individuals realise they have an issue or need professional help.
All in all this can be a stressful time, particularly if you find yourself in this situation inadvertently. We will aim to put you mind at ease and act as your advocate, lay out the situation for you and a route forward with time frames, a calculation of the tax and a plan to mitigate any penalty.