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Although this will not affect most of our clients with whom we ensure their matters are up to date, we thought it was a useful subject to highlight. Should you be in any doubt whether this might apply, please don’t hesitate to contact us.
HMRC has introduced new legislation called ‘Requirement to Correct’ (RTC) with a hard deadline of 30th September 2018.
This means that if you have overseas assets or income for which you haven’t fully declared your UK income tax, CGT or IHT liabilities HMRC could impose a minimum penalty of double the tax owed. This could essentially double your tax bill. In addition to this, from the 1st October HMRC will have an increased ability to track down UK taxpayer’s financial information in over 100 countries which will make it far easier for them to pick up on any unpaid tax.
If you declare the income after the end of September, tax and interest will be applied in line with existing penalty rules. Once HMRC has been notified, you will have 90 days to pay any tax owed.
Renting out a property abroad such as Airbnb, transferring income and assets from one country to another, or even renting out a UK property while living abroad are circumstances covered by the rules. The rules also cover holiday homes, timeshares, savings accounts, life assurance policies, pensions, stocks and shares accounts, art and antiques, boats, cash and jewellery. If you have set up an Offshore trust to pass on money to loved ones these are also covered by the rules. For example, bare trusts, interest in possession trusts, discretionary trusts and accumulation trusts.
HMRC advises anyone with overseas assets or income to check their tax returns and seek professional advice from a tax advisor. The period that’s under review spans from 1998 to 6 April 2017.
If you would like further information on this the RTC leaflet is available to download here: