Taxman Seeks: Longer Time Limits for Offshore Investigations

The budget includes proposals to allow HM Revenue & Customs to go back into even more years in its offshore tax investigations: even in cases of innocent error.

When HMRC thinks that a tax return is incorrect it can open up an enquiry going back 4 years in cases of innocent error, and up to 6 years in cases of carelessness. As part of this year’s Budget the Treasury produced a consultation document: “Tackling tax avoidance, evasion and non-compliance”.  This shows that HMRC is looking to expand the number of years into which it can raise enquiries to 12 years – even in cases of innocent error (i.e. an extra 8 years!). The current 20 year time limit for it to assess deliberate errors would remain in place.

HMRC will consult on the proposal in Spring 2018.

Where additional tax is assessed, HMRC also charge interest on that tax.

Where an incorrect Tax Return is concerned, penalties can only be charged in cases of careless or deliberate behaviour.  However, the penalty rules in respect of offshore matters get much tougher from 1 October 2018 when the failure to correct” penalties start. Anyone failing to correct any non-compliance existing on 5 April 2017 by the deadline of 30 September 2018 will be liable for these new, swingeing, penalties: which can be as high as 300% of the under-declared tax plus 10% of the value of the relevant asset.

What does this mean for me?
If you have assets, or control a company, or are linked to a trust, outside the UK – and there is a possibility that your tax affairs are not fully compliant – then these provisions (if enacted) will massively extend your period of uncertainty.  And if HMRC assess you to extra tax after 30 September 2018 you will also be liable to new ultra-harsh penalties.

How can Lynam Tax Disclosure Experts help me?
Our Tax Disclosure Specialists have a huge amount of experience in dealing with voluntary disclosures in respect of UK residents with offshore bank accounts and other assets. We have the training, knowledge, skills and deep experience to properly manage your offshore disclosure, or if you are already under investigation our expertise will get you the best possible outcome.  HMRC use specialist investigators to deal with offshore issues: you need dedicated, experienced, and committed experts on your side.

*For a free, private, no obligation consultation, call today:

Paul Lynam:  0845 643 9997
Andrew Nutbrown:  07718 778710