Foreign income fines threat
Taxpayers have a month to disclose undeclared tax liabilities on overseas assets before new legislation comes in
HM Revenue and Customs (HMRC) is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before September 30 to avoid having to pay high tax penalties.
New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax.
According to financial secretary to the UK Treasury, Mel Stride MP some UK taxpayers may not realise they have a requirement to declare their overseas financial interests.
Under the rules, actions such as renting out a property in Spain, transferring income and assets from one country to another, or renting out a UK property when living abroad could mean taxpayers face a tax bill in the UK, he noted.
HMRC is holding a public meeting on the legislation in Rojales next week.
Mel Stride MP, said: “Since 2010 we have secured over £2.8bn for our vital public services by tackling offshore tax evaders, and we will continue to relentlessly crack down on those not playing by the rules.
“This new measure will place higher penalties on those who do not contact HMRC and ensure their offshore tax liabilities are correct.
“I urge anyone affected to get in touch with HMRC now.”
He noted that from October 1 more than 100 countries, including the UK, will be able to exchange data on financial accounts under the Common Reporting Standard (CRS).
The MP claimed that CRS data ‘will significantly enhance HMRC’s ability to detect offshore non-compliance’ and it is in taxpayers’ interests to correct this before the data is received.
“The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money into the UK from abroad,” he said.
“Over 17,000 people have already contacted HMRC to notify the department about tax due from sources of foreign income, such as their holiday homes and overseas properties.”
Customers can correct their tax liabilities by: using HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any other service provided by HMRC as a means of correcting tax non-compliance; telling an officer of HMRC in the course of an enquiry into a person’s affairs; or using any other method agreed with HMRC.
Once a customer has notified HMRC by September 30 of their intention to make a declaration, they will then have 90 days to make the full disclosure and pay any tax owed.
“If taxpayers are confident that their tax affairs are in order, then they do not need to worry,” added Mr Stride.
If anyone is unsure, HMRC recommends they seek advice from a professional tax adviser or agent.
The standard penalty is 200% of the tax not corrected, although this may be reduced depending on the taxpayer’s level of co-operation with HMRC.
Rojales councillor Derek Monks noted: “These changes can affect people if they live abroad and pay tax outside the UK, for example people who rent out their UK home whilst
UK taxpayers have a month to disclose undeclared tax liabilities on overseas assets before ‘Requirement to Correct’ legislation comes in
living in another country or those who still have UK bank accounts or investments.”
He invited people to attend the event in Rojales ‘to hear if it affects you’.
The British consulate-sponsored presentation will be held on Tuesday (September 4) in the Capitol theatre at 11.00.
Mr Monks added: “The consul will be in attendance along with HMRC representatives from the UK and your questions will be addressed.”