Ten things about offshore assets and income – UKMALAYALEE

Ten things about offshore assets and income

Monday 1 October 2018 1:26 AM UTC

LONDON Oct 1: Taxpayers who have hidden assets or income overseas could be hit with fines worth twice the amount of tax owed under strict new rules introduced by HMRC.

The “requirement to correct” (RTC) legislation comes into force from Oct 1 and requires taxpayers to declare any foreign assets that could affect their UK income tax, capital gains tax or inheritance tax.

Those who notify HMRC before the deadline will be given 90 days to disclose fully any offshore assets and pay the tax due.

1. What offshore income is

Income is considered ‘offshore income’ if it comes from a territory outside the United Kingdom. It includes:

interest from overseas bank or building society accounts

dividends and interest from overseas companies rent from overseas properties wages, benefits or royalties earned outside the UK

2. It’s important for UK taxpayers to declare offshore income

If you’re a UK resident, you’re breaking the law if you fail to tell HM Revenue and Customs (HMRC) about your taxable offshore income. HMRC is getting tougher on those who try to evade tax by hiding their assets or income offshore. We are increasing the size and range of penalties charged, and increasing the number of prosecutions of serious evaders.

3. If you’re unsure, we’re here to help

If you’re having trouble working out whether you have paid the right amount of tax or have offshore income you need to declare, you can either get help from HMRC or consult a tax adviser. Read get help with tax for more information.

4. Previous advice may be outdated

Because laws and specific circumstances can change, advice that you took in the past may no longer be valid. HMRC has unfortunately seen taxpayers who’ve sought guidance in good faith, get caught out because the advice has become out of date.

It’s important to check your tax affairs regularly.

5. Where you normally pay tax

If you’re not resident in the UK for tax purposes you won’t usually be liable to pay tax in the UK on your offshore incomes and gains but it’s important to check your residency status and what’s taxable from offshore income.

6. There are ways to tell HMRC about any untaxed worldwide income

If you’re concerned that you’re not paying the right amount of tax you can tell HMRC and may be able to use one of our disclosure facilities. You will still pay the tax that is legally due in full, alongside penalties and interest.

7. We’re bringing in tougher penalties for offshore evasion and non-compliance

HMRC has introduced new legislation called the Requirement to Correct which will dramatically increase the penalties for people who have not declared tax or declared the wrong amount of tax on their offshore income and gains.

If you have declared your taxable income and gains then you have nothing to worry about. But if you haven’t, and HMRC finds out, you will face an investigation and will have to pay the undeclared tax, a penalty of up to double the tax you owe, and could even go to prison.

You can avoid being charged the higher penalties by making a full disclosure of all undeclared tax liabilities under the Worldwide Disclosure Facility.

If you’re concerned, now is the time to come forward. You have until 30 September 2018 to correct this before the tougher new penalties are introduced.

8. A new international agreement is making it harder to evade tax on offshore income

HMRC has started receiving more information about international investments and financial structures held offshore by UK tax residents. More than 100 countries and jurisdictions have already committed to exchange this data.

9. HMRC is cracking down on those who help others to evade tax offshore

New laws will punish the enablers of evasion, not just the evaders themselves. Enablers can face civil penalties, criminal prosecution and public naming.

10. There’s nothing wrong with having investments overseas

As long as you declare all taxable income and gains on your UK tax return you have nothing to worry about. If you’re confident that your tax affairs are up to date, you don’t need to do anything further. If you’re unsure, we recommend that you speak to an adviser.

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