Tough love over UK tax
Expats filled Moraira and Rojales halls for talks
THE UK taxman is clamping down on undeclared income earned offshore and on British soil with a September 30 deadline to start putting things in order.
The British consular service brought representatives of HMRC to Moraira to brief a full-house of some 250 people on the new and “quite complicated” legislation called ‘the Requirement to Correct’.
And the complicated nature of tax and the threat of tough penalties from October 1 meant around half patiently queued after the meeting to raise individual concerns with the experts.
Questions were fired about how to identify whether people should be a tax resident of the UK of Spain, the “complicated” double tax agreement between the two nations; maintaining a UK bank account – and why high street banks made it so difficult when it was perfectly above board – and civil service pensions apparently taxed home and away.
Richard Bause, from the HMRC international collaboration and transparency department, said the new law could affect “UK residents and nonUK residents with inter- national financial affairs” and there was a “window of opportunity” for people who owe taxes in the UK to “put right their non-compliance”.
He said by declaring “errors” and putting them right would attract a lower penalty of between 30-40%; while “much tougher” penalty of 100-200% later; a “motivation” to get tax affairs in order.
Mr Bause added, “There is a risk that someone who has errors and not corrected them could be affected and impacted by this legislation.
“I know I am not talking to hardened criminals – at least I hope not – but the penalty regime is getting tougher.”
And he added, “Typically we are talking about income: employment income; income generated from pensions; capital gains on the sale of assets; rental income from properties.”
People who were UK tax resident were “more likely” to owe more money to HMRC but non-UK tax residents – such as expats in Spain – could still be affected. From October 1, 110 countries would be sharing fi- nancial information.
However, Mr Bause said there was a “reasonable excuse” clause in the new law that could offset penalties. “We are trying to use more carrot than stick; it is a soft deadline, if there is something you think you have to tell HMRC, you inform them and have 90 days to put it right.”
Hazel Smith, of Denia firm HCS Accountants, attended the meeting and said, “As Spanish tax residents we are already under the cosh to the Spanish taxman; it’s brutal – the fines are brutal and punishing, and some people are having terrible trouble.
“We have to meet requirements in the UK; I understand that because I deal with clients with UK property and public pensions that are taxed in the UK but now through the back door here.
“There is a two-tax trap; we are trying to make our way here, which is tough and now trying to deal with this; we need clear guidance. Tax is complicated ... people should not be fined just because it’s hard and complicated – there is a difference between fiscal fraud and a few errors; we just don’t know what we are doing.”
Richard Bause from HMRC in Moraira on Tuesday