HMRC has published additional guidance on the requirement to correct offshore tax non-compliance. This additional guidance supplements the original guidance which was published back in November 2017.
The original deadline for the requirement to correct passed on 30 September 2018. However, any taxpayer who has undeclared tax, whether inside or outside of the UK, should still come forward and disclose this to HMRC at the earliest opportunity. The additional guidance has been issued to clarify information on the following points:
Class 4 NICs and class 2 NICs are within the scope of the requirement to correct legislation.
The requirement to correct legislation sets out that only tax non-compliance committed before 6 April 2017 is covered by the requirement. TMA 1970 s 36A sets a time limit of 12 years for non-deliberate offshore non-compliance. Consideration should be given to the potential charging of failure to correct penalties if tax is assessable for a year which is within scope of the requirement to correct.
When the remittance basis charge becomes due as part of the tax consequences of offshore non-compliance, it may be part of the offshore potential loss of revenue for the purposes of working out failure to correct penalties. This continues to apply when the remittance basis is claimed retrospectively in response to an investigation which uncovers offshore non-compliance.
If a taxpayer dies while their affairs are within the scope of the requirement to correct, any failure to correct penalty is unlikely to be applicable to the personal representatives.
In requirement to correct cases, the question to consider is if the taxpayer had a reasonable excuse for failing to correct relevant offshore tax non-compliance before 1 October 2018. The nature of the requirement to correct obligation means that a reasonable excuse which is based solely on a lack of awareness of the requirement is unlikely to be accepted.
HMRC has published additional guidance on the requirement to correct offshore tax non-compliance. This additional guidance supplements the original guidance which was published back in November 2017.
The original deadline for the requirement to correct passed on 30 September 2018. However, any taxpayer who has undeclared tax, whether inside or outside of the UK, should still come forward and disclose this to HMRC at the earliest opportunity. The additional guidance has been issued to clarify information on the following points:
Class 4 NICs and class 2 NICs are within the scope of the requirement to correct legislation.
The requirement to correct legislation sets out that only tax non-compliance committed before 6 April 2017 is covered by the requirement. TMA 1970 s 36A sets a time limit of 12 years for non-deliberate offshore non-compliance. Consideration should be given to the potential charging of failure to correct penalties if tax is assessable for a year which is within scope of the requirement to correct.
When the remittance basis charge becomes due as part of the tax consequences of offshore non-compliance, it may be part of the offshore potential loss of revenue for the purposes of working out failure to correct penalties. This continues to apply when the remittance basis is claimed retrospectively in response to an investigation which uncovers offshore non-compliance.
If a taxpayer dies while their affairs are within the scope of the requirement to correct, any failure to correct penalty is unlikely to be applicable to the personal representatives.
In requirement to correct cases, the question to consider is if the taxpayer had a reasonable excuse for failing to correct relevant offshore tax non-compliance before 1 October 2018. The nature of the requirement to correct obligation means that a reasonable excuse which is based solely on a lack of awareness of the requirement is unlikely to be accepted.
