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Requirement to Correct - deadline approaching

Anyone (individuals, partnerships, trustees or non-resident companies) with undeclared UK income tax, CGT or IHT arising from offshore matters or transfers, (whether as a result of inadvertant non-disclosure or deliberate evasion) has until 30 September 2018 to disclose the relevant information to HMRC. If not disclosed, they will face hefty new penalties, of at least between 100% and 200% of the tax involved, should the non-compliance subsequently be uncovered by HMRC (for instance through data obtained via exchange of information under the Common Reporting Standard). The deadline applies to any undisclosed liabilities for previous tax years that were still in time for assessment on 6 April 2017 (or, for IHT, on 17 November 2017).

Disclosure can be made using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility (WDF); telling an officer of HMRC in the course of an enquiry into your affairs; or any other method agreed with HMRC. If the non-compliance necessitates filing a notice or return you can also comply by sending that document to HMRC. Although generally the taxpayer is required to supply HMRC with the information it needs to be able to calculate the tax due as a result of the non-compliance on or before 30 September 2018, there are a few limited circumstances in which you may provide the information within a short period after that date, provided you have notified your intention to disclose to HMRC by 30 September 2018. For instance where disclosure is made via the digital disclosure facility.

The enhanced penalties for failure to correct under this requirement can be avoided if the taxpayer had a "reasonable excuse" but this is interpreted narrowly and the tax will still have to be paid along with interest and standard penalties.

It should also be noted that in future the time limit in which HMRC can investigate non-deliberate non-compliance in cases involving offshore matters, will be increased to 12 years for Income Tax, CGT and IHT. This increases the existing time limits of four years, or six where the failure is due to carelessness.

Anyone wanting their tax position in relation to offshore assets or arrangements reviewed should seek immediate advice.

September 2018

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Bankside Office

240 Blackfriars Road
London
SE1 8NW
DX 53 Chancery Lane

Telephone: +44 (0)20 7629 7411
Fax: +44 (0)20 7629 2621
Email: bh@boodlehatfield.com

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