Written warnings have been received by UK taxpayers, with HM Revenue & Customs (HMRC) intending to crack down on undeclared income.
Individuals with overseas links, including income and accounts, have been urged to correct their tax returns by the deadlines given.
Failure to do so will see taxpayers having to pay a potential fine of up to 200 per cent – that’s double the original tax owed.
Alongside the financial penalty of 100-200 per cent of the tax liability, there is also the possibility that individuals will be named and shamed for tax avoidance.
They may also face an asset-based penalty of up to 10 per cent of an asset’s value, where tax is over £25,000 annually.
However, there is still a lack of awareness surrounding the declaration of overseas interests; people with holiday homes or rented properties abroad, for example, may not realise that they have to declare these for tax purposes.
The new rules are focused on income and Inheritance Tax (IHT) especially, though there is an emphasis on all taxpayers reviewing their affairs, according to advisers.
The Requirement to Correct (RTC) legislation leaves only a short amount of time for individuals to make decisions; the guidance was first made available in July, but action is required before 30 September 2018, therefore taxpayers are well advised to seek specialist advice sooner rather than later.
The letters that people will be getting through their doors is the last warning given by HMRC; 2018 is the year that it will gain the data it needs to ensure individuals have declared gains and incomes outside of the UK.
Coincidently, the RTC was introduced at the same time that the UK would be able to exchange financial data with other countries under the Common Reporting Standard (CRS).
This will help HMRC get to the bottom of offshore non-compliance.
While there is no demand for information, the letters alert customers to the new rules; they can review the information and anything supplied will not need to be supplied again.