The Requirement to Correct
Posted on 22nd August 2018 at 19:35
What does the “Requirement to Correct” mean?
The Requirement to Correct rule was enforced by the HMRC to prove the opportunity to taxpayers that possess assets overseas to correct any issues or genuine mistakes causing them to fail to declare the correct amount of tax owed.
What does HMRC want taxpayers to do now?
The HMRC requires everyone who has or has had any offshore financial connections to review their tax affairs and make sure that all tax returns are 100% correct; alternatively, penalties will be enforced. The HMRC also require all taxpayers to submit tax returns for all years for which the taxpayer has owed tax on financial gains.
Some taxpayers submit disclosures if there is doubt over a technical position so that they can protect their positions against the failure to correct sanction as the HMRC can later decide that additional tax is due.
Is there a deadline?
The taxpayers must act upon the required steps to correct their UK tax position by the 30th of September 2018.
What happens if you fail to declare errors by the 30 September 2018?
After the 30th of September, the (FTC) or Failure to Correct regime will take place. The potential penalties for failure to declare the correct amount of tax owed are:
• A tax-geared penalty of between 100% and 200% of the tax that was failed to be corrected.
• An asset-based penalty of up to 10% of the value of the relevant asset where the tax at stake is over £25,000 in any tax year.
• Potential “naming and shaming” where over £25,000 of tax per investigation is involved.
• An additional penalty of 50% of the amount of the standard penalty, if HMRC could show that assets or funds had been moved to attempt to avoid the RTC on purpose.
A ‘health check’ of a taxpayer’s position during the RTC period or other reasonable reason is a solid foundation for defence where charges or penalties will not incur should you fail to declare tax owed.
If you require any tax-related help from our experts with decades of experience in complex tax affairs, then please get in touch with us today on 0333 772 7753 or e-mail us at [email protected]
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