Are you prepared for the requirement to correct?

The requirement to correct (RTC) legislation is now in force and concerns all taxpayers with overseas income or assets. The purpose of the RTC rules is to encourage taxpayers with overseas interests to ensure that their historical UK tax position is corrected by 30 September 2018. Those who do not do so by that date will be exposed to greatly increased penalties.

Since the introduction of automated information exchange, HMRC has had access to an increasing amount of information. The worldwide standard for information exchange, the Common Reporting Standard, becomes fully effective later this year and the introduction of these new RTC measures has been timed to coincide with this.

The RTC applies to pre April 2017 tax liabilites relating to income or assets held outside of the UK including, amongst other things:
 
  • income from financial assets or real estate;
  • income arising in connection with offshore structures;
  • remittances to the UK;
  • dividends paid offshore; and
  • carried interest.
Complex aspects such as interests held in trusts, the consequences of offshore employments, or international tax agreements such as the UK/Swiss withholding levy all require careful consideration and specialist advice.

Might a second opinion be timely?

Even if you believe your tax affairs are in order, should it later emerge that there is a liability which could have been corrected, you may still be liable for an RTC penalty. The only defence will be if you have a ‘reasonable excuse’ for not having made the correction before 30 September 2018. Having taken professional advice may not automatically count as a reasonable excuse - for example the adviser may not have been provided with all of the relevant facts. If you are in any doubt you should seek a second opinion well in advance of 30 September. If you are concerned about your overseas interests, even if you have previously taken advice, please contact us.  

To find out more about the requirement to correct, download our factsheet.

 

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