Tough love over UK tax

Ex­pats filled Mo­raira and Ro­jales halls for talks

Costa Blanca News (North Edition) - - FRONT PAGE - By Jack Troughton jtroughton@ cb­news.es

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

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