HMRC and offshore assets
This October, more than 100 countries will enter into an agreement that allows for the exchange of financial accounts data between one another. This agreement – known as the Common Reporting Standard (CRS) – will thus enable HMRC to improve its visibility over offshore assets held by UK taxpayers, and improve detection of non-compliance.
Before implementation – which comes into play on October 1 – HMRC is encourage taxpayers to declare any interests held overseas. These interests are likely to relate to property, investment income, and the moving of money into the UK. In statements released by HMRC, more than 17,000 people have already declared their interests in overseas assets – predominantly property – but others are being urged to come forward before September 30 to avoid penalties.
With the imminent arrival of the Common Reporting Standard, new legislation has been introduced, known as the Requirement to Correct (RTC). This piece of legislation enables those that may have made incorrect or inadvertent errors during their declarations to notify HMRC about any tax liabilities held overseas that relate to income tax, inheritance tax, or capital gains tax.
What assets need to be declared?
While the majority of declarations so far received have related to property, there is a comprehensive list provided by HMRC of assets and investments that need to be disclosed. These are:
- Art and antiques
- Bank and other savings accounts
- Debts owed to you
- Gold and silver articles
- Government securities
- Land and buildings, including holiday timeshare
- Life assurance policies and pensions
- Other accounts, such as stockbroker’s or solicitors’
- Other bond deposits and loans including personal portfolio bonds
- Rights or intellectual property including image rights
- Stocks and shares
- Trusts including employee benefit trusts and self-employed persons trusts
What are the penalties for non-disclosure?
Failure to disclose any overseas assets presents a risk that could incur expensive penalties – penalties that reach unprecedented levels in the UK. The starting point will be the tax due plus any interest on late payments, but the undeclared will be charged at 200% of its value. For more serious cases, i.e. those where more than £25,000 of tax is involved in a given tax year, an additional penalty of up to 10% of the assets will be levied.
How to make an RTC disclosure
In order to make your disclosure to HMRC, you have a number of options. Arguably the simplest way is using the online service as part of the Worldwide Disclosure Facility. You can, of course, simply disclose the necessary information to an HMRC officer, or use any of the other methods approved by HMRC. Contact them today for more details. Once the RTC has been made, you will have 90 days in which to make a full disclosure and pay any tax that is owed.
For more information on disclosing your overseas assets to HMRC, speak to an experienced financial advisor today.