HMRC urges taxpayers to declare foreign income

HMRC has been advising people of the tougher stance being taken where individuals have not paid tax on assets held offshore. For almost 10 years, various forms of tax amnesties have been open through targeted disclosure facilities to specific professions and trades which offered significantly lower penalties to those who made a voluntary disclosure to HMRC (e.g. The Liechtenstein Disclosure Facility which was preceded by the Offshore Disclosure Facility).

 

Now we have the Worldwide Disclosure Facility (WDF) which will allow people to ensure their affairs are correct before the Common Reporting Standard (CRS) comes into force in October 2018.

 

The CRS was developed in 2014 in response to a G20 initiative driving the automatic exchange of financial information across jurisdictions. So HMRC will have access to lots of new information.

 

The WDF is available to all UK and non-UK resident businesses, organisations and individuals that have a hitherto undeclared UK tax liability from an overseas source or from a UK source that was later transferred to another country, e.g. a bank account in the Republic of Ireland, Isle of Man, Jersey, undeclared bank account in a deceased person’s estate and offshore property. The facility covers all direct taxes and Inheritance Tax. The most important change is the tougher stance HMRC will take where those affected fail to act – potentially resulting in significant penalties or even criminal investigation if the offence is deemed serious enough. Under the new legislation HMRC will introduce new sanctions for “requirement to correct” or “failure to correct”. Those who use the voluntary disclosure via the WDF will receive lower penalties – the HMRC message being put quite bluntly: “come to us before we come to you”. HMRC explains quite clearly that it has and will continue to obtain new financial information from over 100 jurisdictions – so it is clear they mean business.

 

PKF-FPM have a specialist tax investigation team with significant experience in dealing with these situations and can help in negotiating with both tax authorities.

 

Based on our experience of handing these serious types of tax investigations and disclosures, we understand how stressful, invasive and potentially life-changing these situations can be.

 

Taking specialist advice early on is crucial – to minimise the settlement and give the individual peace of mind – please feel free to contact Seamus McElvanna via email s.mcelvanna@pkffpm.com or Pat Donnelly p.donnelly@pkffpm.com