HMRC has announced a short extension to the deadline for making full disclosures of tax irregularities related to offshore accounts and assets: prior to the introduction of a new ultra-tough penalty regime from 1 October 2018. There are formal steps that have to be taken in order to qualify for the extension. In the vast majority of cases the final deadline will not be extended beyond the end of 2018.
From 1 October 2018 harsh new legal sanctions will apply in cases of undeclared foreign income and gains. There is a new legal Requirement to Correct (R2C), whereby anyone with tax irregularities relating to any offshore issues will be obliged to disclose them: or face tough new penalties or prosecution. Anyone who has not regularised their tax affairs by 30 September 2018 will then be subject to the new harsh Failure To Correct (F2C) penalties. More details about the Failure To Correct sanctions can be found in the Offshore Disclosures section of our website.
Although the 30 September 2018 deadline is set in statute: HMRC have now announced a short concessionary period.
Taxpayers will not be liable to Failure To Correct penalties in the following limited situations.
Worldwide Disclosure Facility Registrations
The start date for the penalties will be delayed for people who register for HMRC’s Worldwide Disclosure Facility in the following two circumstances. You must register your intention to make a disclosure by telephone by 4pm on 28 September 2018, or via HMRC’s Digital Disclosure Service by midnight on 30 September 2018. Following registration HMRC will set a 90-day time limit for making the Full Disclosure.
F2C penalties will not be charged if the Full Disclosure is then made by that 90-day deadline. Where a WDF disclosure is considered to be “complex” HMRC occasionally extend the 90-day deadline for submission of the full disclosure to 180 days. Whilst they will continue to do that in terms of when the Full Disclosure has to be filed; they will not extend the concessionary period for F2C penalties beyond 90 days. In other words, to avoid the new F2C penalties all Full Disclosures would have to be filed within the 90-day window (which for the vast majority of cases will close on or before 29 December 2018).
Code of Practice 9: Contractual Disclosure Facility
F2C penalties will not be charged if you apply by email to make a disclosure of deliberate behaviour involving offshore tax non-compliance via HMRC’s Contractual Disclosure Facility (CDF) process by 30 September 2018. If your request for COP9 is agreed HMRC’s Fraud Investigation Service will set a 60-day time limit for you to submit your initial Outline Disclosure. If that deadline is then met then HMRC will not charge Failure To Correct penalties for any issue detailed in that Outline Disclosure.
If you are already undergoing a Tax Enquiry then as long as you inform the investigating officer that you wish to make a disclosure of offshore tax non-compliance by 30 September 2018, and then you submit an initial Outline Disclosure to that person by 29 November 2018, you will not be liable to F2C penalties in respect of any issues covered by that Outline Disclosure.
What does this mean for me?
If you have any historic tax irregularities connected to offshore matters, and you want to make a full disclosure to HMRC, then you need to act immediately – before this short concessionary time it expires. And even if you miss that deadline you should still act promptly. Making an early voluntary disclosure will still lead to very substantial reductions from the draconian penalties.
How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists have vast experience in dealing with voluntary disclosures for UK residents with foreign bank accounts and other offshore assets. We have the training, up-to-date knowledge, specialist skills, and the depth of recent and relevant experience to properly manage your offshore disclosure to HMRC. We can reduce the hassle and get the best possible outcome for you: even if you are already under enquiry. HMRC use dedicated specialist investigators to deal with offshore issues: you need dedicated, experienced, and committed experts on your side.
To find out how we can help you and for a free, confidential and no obligation discussion, call Paul today on: 0845 643 9997
NB: Don’t Wait – The Taxman will be getting details from 100 countries!!