The UK has introduced new penalties under the Requirement To Correct (“RTC”). The RTC imposes an obligation on anyone who has under-declared UK tax liabilities to make a disclosure to HM Revenue & Customs (“HMRC”), the UK tax authority.
Failure to disclose by 30 September 2018 will result in punitive penalties. The standard penalty is between 100% and 200% of the tax owed. In addition HMRC may:
- Charge an additional penalty of 50% of the standard penalty, if HMRC can show that funds have been moved outside the UK to avoid the RTC.
- Charge an asset based penalty of up to 10% of the relevant asset where the tax liability is over £25,000 in any tax year.
- Name and shame anyone who owes more than £25,000 of tax
Penalties may be avoided where the taxpayer engages an independent UK tax advisor to perform a tax review and either help the taxpayer meet his or her obligations, or provide evidence that the taxpayer took reasonable care. For this purpose it is insufficient to get a tax review from the original advisor who helped set up a non-UK structure.
The RTC applies to individuals, partnerships, trustees or non-resident landlord companies. In particular, the following persons should consider obtaining a tax review:
- Anyone receiving UK rental income
- Individuals who live in the UK or regularly visit the UK
- Trustees holding UK assets
- Trustees holding companies or partnerships which hold UK real estate and
- Trusts settled by a UK domiciled individual.
We can help. We assist clients in determining whether they have a current or historic UK tax obligation. Where necessary we can assist with disclosing historic obligations to HMRC whilst minimising the client’s overall liability.
Please contact Mark Davies for any additional information on this topic.
Mark Davies, Managing Director
00 44 203 770 5600