New_ Tax_ Penalties_ Re_ Overseas_ Assets_ and_ Bank_ Accounts_ –_ Update
Since September 2017, HMRC have been receiving information on foreign bank accounts and foreign financial investments from over 100 countries under the Common Reporting Standard.
You may have received letters from HMRC entitled “Important: Your final opportunity to bring your worldwide tax affairs up to date”.
If you have received one of these letters, you will have been asked to complete and return a certificate with three options: –
- Declaration that you will declare any unpaid taxes using HMRC’s Worldwide Disclosure Facility
- Declaration that you have no overseas assets, OR
- Declaration that all taxes have been paid
You should not ignore this. In the past (for other tax amnesties), letters from HMRC of this kind have suggested that they have specific information which might indicate an under-declaration of tax.
Therefore, the certificate should be completed and returned to HMRC, with the appropriate box ticked.
If you fail to respond or respond inaccurately, HMRC may investigate you further and if tax is found to be owed, they will charge higher penalties and consider other action.
If you need more time to respond to the certificate to assess your position, this can be requested from HMRC.
You should seek advice from an accountant or adviser familiar with these issues on your best approach.
Please note that even if income is taxed overseas, there is still a need to report that income on your UK tax return, except in certain circumstances. UK tax might still be due on that overseas income. This is the most common area where we see mistakes and confusion.
What if you have made an error?
If an error has been made, we can assist you to settle your position with HMRC.
In most cases, this will be via HMRC’s Worldwide Disclosure Facility.
Worldwide Disclosure Facility – how this works
The Worldwide Disclosure Facility is an on-line portal allowing taxpayers (and their agents) to report and settle historic under-declarations of tax connected with offshore assets or income.
The process is as follows: –
- We register you into the system and HMRC send a specific reference number.
- We then have 90 days to make a disclosure on your behalf.
- You need to pay the tax, interest and penalties calculated at the point we file the disclosure.
- HMRC then have a further 90 days after the disclosure to respond either confirming acceptance or to ask further questions.
Whenever we have been involved so far, matters have been settled amicably and we have negotiated significant reductions in penalties which would have otherwise been due.