From October 2018, HMRC will be introducing new legislation that will dramatically increase the potential for fines for individuals (or companies) that use Offshore Accounts to evade tax. If this affects you read on! We also take a look at tax credits and what to do if you can’t pay outstanding tax liabilities.
Can you evade tax by moving it offshore?
Looking for ways to reduce your tax liability? In the ‘good old days’ many individuals used offshore accounts to evade the eyes of HMRC. However, from 1 October 2018, HMRC will be gaining access to information from traditional tax havens that will enable it to identify UK citizens with undisclosed offshore assets, and by inference, undisclosed UK income and taxable gains.
This new legislation entitled the Requirement to Correct will dramatically increase the penalties for people who have not declared tax or declared the wrong amount of tax on their offshore income and gains.
If you have declared your taxable income and gains, then you have nothing to worry about, but if you haven’t, and HMRC finds out, you could face an investigation and be required to pay the undeclared tax, plus a penalty of up to double the tax you owe – with a minimum penalty of 5% of tax owed.
You can avoid being charged the higher penalties by making a full disclosure of all undeclared tax liabilities under existing disclosure facilities.
Offshore income sources that should be declared include:
- interest from overseas bank or building society accounts,
- dividends and interest from overseas companies,
- rent from overseas properties, and
- wages, benefits or royalties earned outside the UK.
If you are concerned, now is the time to come forward. You have until 30 September 2018 to correct matters before the tougher new penalties are introduced.
Tax payers who are uncertain if they are affected are advised to call and seek guidance.
To find out more about this article please contact us.