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The Requirement to Correct (RTC) required any taxpayers with links to offshore assets to review and regularise their historic tax affairs by 30 September 2018. RTC dictated that every entity in the world had an obligation to identify and disclose historic non-disclosure relating to UK Income Tax, Capital Gains Tax and Inheritance Tax.

Failure to do so means that the entity may well now have a "Failure to Correct".

BACKGROUND

The Common Reporting Standard (CRS) and various beneficial ownership registers mean that HMRC’s access to third party information has increased significantly and they can more easily identify individuals who may not be declaring their worldwide income and gains.

In HMRC’s eyes, they have offered numerous favourable opportunities to make a disclosure of any historical offshore income and/or gains assets over the past decade. They are thus taking a strong stance against any taxpayers who, in their eyes, opted not to disclose despite several prompts and opportunities. HMRC have made it clear that they will not hesitate to prosecute, where they consider it to be appropriate.

Given the complexity of the UK tax legislation, it is vital that anyone with a UK tax connection undertakes a review of their tax affairs.

RTC was brought in to catch individuals who have taken structuring advice but where implementation or operation have not been perfect. Failure to have undertaken a review and register to make a disclosure prior to the 30 September 2018 deadline may mean that the entity and/or individual now has a "Failure to Correct".

The potential issues which could be caught include:

Undeclared overseas income and/or gains,
Undeclared remittances to the UK,
Constructive remittances to the UK (i.e. benefitting from the monies in the UK, even if funds were not physically transferred – for example, settling a UK debt, paying for a UK service or moving artwork to your UK home),
Tainting of capital accounts/mixed funds.
Failure to pay the Remittance Basis Charge (RBC),
Trust structures,
Overseas property, or
The transfer of assets abroad.

FAILURE TO CORRECT (FTC)

Anyone who is found not to have corrected the position as of 1 October 2018 will be subject to the FTC penalty regime, which means:

Penalties of up to 300% of the potential lost revenue (minimum 100%),
A potential 10% asset-based penalty, and
Potential “naming and shaming”, whereby your name, address and details of tax underpaid are published by HMRC.

HOW CAN HAMILTON ROSE HELP?

Hamilton Rose have 30 years of combined experience dealing with reviews of clients’ affairs and, where necessary, making voluntary disclosures. We know the information HMRC are likely to obtain under CRS, we know how to mitigate the potential associated risks and we know how to ensure that any FTC penalties are mitigated as fully as possible.

We appreciate that making a voluntary disclosure is often the first time that a client/their adviser has approached HMRC and that it can be a nerve-wracking experience. We will ensure that you are fully supported throughout the process and give you peace of mind that any historic UK tax inaccuracies are fully resolved and that your best interests and assets are protected.

Once matters are resolved, we can also assist trustees and individuals with any UK tax compliance obligations going forward to ensure that you remain fully protected against any potential allegations by HMRC.