HMRC is writing to taxpayers who may own assets overseas or have a source of offshore income. These assets could be anything from a Jersey bank account to an overseas holiday let, or more seriously trusts or companies registered overseas.
The letters inform the taxpayers that they must declare any overseas income or gains on their UK tax return and correct any omissions from past years’ returns by 30 September 2018.
From this date HMRC will begin exchanging data on financial accounts directly with 100 other countries under the common reporting standard. This will make it much easier for HMRC to identify offshore tax evasion quickly by comparing accounts or assets owned abroad to declarations made in the UK.
If you get caught out for not declaring overseas taxable income, transactions or gains after September 2018 you could face a penalty of 200% of the tax due. This penalty can apply even if you believed the income or gain was not taxable in the UK, and you had no intention to evade UK tax. However, if you took qualified advice that determined that the income was not taxable in the UK, you will have a reasonable excuse for not declaring the amount on your UK tax return.
There is not much time left to make a full correction and pay all the tax due, but if you contact HMRC before midnight on 30 September 2018 using one of its formal disclosure facilities, you will have longer to submit your full disclosure.