HMRC has issued a warning that offshore assets will now need to be declared. There will be penalties for taxpayers if they do not declare any income they derive from foreign assets or profits from offshore assets before the new legislation – ‘Requirement to Correct’ becomes active on the 30th September.
Under this new legislation any tax liability offshore that relates to UK income tax, capital gains or inheritance tax must be declared. Failure to do so will leave an individual open to the risk of high tax penalties.
It is thought that a multitude of UK taxpayers may not realise that they are now obliged to make a declaration of their foreign financial interests concerning property and other investments. Taxpayers are being urged by HMRC to declare any financial interests that they have overseas. There are new regulations for:
- Those who own property abroad
- Those who rent out a UK property but live abroad
- Transferring assets and income between countries
The new legislation has been brought in as a measure to tackle offshore tax evasion. Mel Stride MP, who is the Financial Secretary to the Treasury said that the new measures have been designed to identify and penalise those who fall into the affected categories and who do not contact HMRC. He reiterated his department’s determination to penalise people who do not comply.
From the 1st of October more than one hundred countries (including the UK) will have the ability to share data on financial matters under the banner of the (CRS) Common Reporting Standing. The introduction of this cross border data sharing will make it much easier for HMRC to identify any non-compliance within the new legislation.
The most common reasons for making a declaration to HMRC will be:
- Investment income from foreign property
- Moving income from abroad to the UK
Customers can amend their tax liabilities at:
HMRC’s digital disclosure service as part of the Worldwide Disclosure Facility or any of HMRC’s other platforms that allow for, correction of tax non-compliance.
Report the liability in the course of an enquiry into their affairs to an HMRC officer.
Use any other method that has been sanctioned by HMRC.
Once HMRC has been informed (by 30th September) of the intention to make a declaration, there will be 90 days in which a full disclosure can be made and any tax owed, paid.
If you are confident that your tax affairs are up to date in respect to any income from property abroad, then you need do nothing. However, if you have any doubts about any income you are receiving from your property abroad, HMRC makes the recommendation that you consult a professional tax-advisor.