HMRC is urging taxpayers to come forward and declare any foreign income or profits on offshore assets before September 30 to avoid higher tax penalties.
New legislation called ‘Requirement to Correct’ requires people to notify the taxman about any offshore liabilities relating to income tax, capital gains or inheritance tax.
HMRC says that some taxpayers may not realise they are required to declare their overseas financial interests.
So what are the rules? Renting out a property abroad, transferring income and assets from one country to another, or even renting out a property here in the UK when living overseas could mean you face a tax bill.
Examples of offshore assets include art and antiques, bank and other savings accounts, boats, vehicles and cash as well as debts owed to you.
They also include gold and silver, jewellery, government securities, land and buildings including holiday timeshares and life assurance policies and pensions.
Also on the list are other accounts, such as stockbroker’s or solicitors’, other bond deposits and loans including personal portfolio bond, rights or intellectual property including image rights, stocks and shares and trusts, including employee benefit and self-employed persons trusts.
Financial Secretary to the Treasury Mel Stride says the crackdown on offshore tax evaders will continue warning: “We will continue to relentlessly crack down on those not playing by the rules.
“This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct. I urge anyone affected to get in touch with HMRC now.”
From the beginning of October more than 100 countries, including the UK, will be able to exchange data on financial accounts under the Common Reporting Standard (CRS).
This will significantly enhance HMRC’s ability to detect offshore non-compliance.
The taxman says that some 17,000 people have already contacted HMRC to notify it about tax due from sources of foreign income, such as their holiday homes and overseas properties.
People can correct their tax liabilities by using HMRC’s digital disclosure service as part of the ‘Worldwide Disclosure Facility’ or any other service provided by HMRC as a means of correcting tax non-compliance.
Once they have notified HMRC by September 30 of their intention to make a declaration, they will then have 90 days to make the full disclosure and pay any tax owed.
If you would like to discuss any aspect of this article or have any tax queries or concerns please contact me on 01772 430000.