Offshore Assets, income or gains …any undisclosed tax liabilities?  HMRC offer ‘Time To Pay arrangements’ during COVID-19 pandemic

01 May 2020

As we have documented in earlier blogs (captured below), ownership details of offshore assets, income and gains have been directly provided to HMRC, via exchange of information agreements with hundreds of overseas countries in the last 2 years. HMRC now have access to unprecedented amounts of information relating to overseas details for UK resident individuals

New ‘Failure To Correct’ tax legislation provides HMRC with powers to charge penalties of up to 200% of any tax due on undeclared overseas income and gains – it has never been so important to ensure all offshore income and gains are reported correctly

The Story So Far

HMRC have already acted on this information, issuing letters to thousands of individuals since February 2018, (‘nudge letters’) confirming they have information which shows they have received income, or hold assets overseas, which may be taxable in the UK, and asking them to check their tax affairs are up to date. These letters usually include a “Certificate of Tax Position”, and the individual is asked to sign and make a declaration to either confirm their tax affairs are correct and up to date, or that they intend to make a disclosure of any irregularities through the Worldwide Disclosure Facility (WDF), and a response is expected within 30 days.

As we have outlined previously , we never recommend the certificates are submitted to HMRC, given tax years that could be involved are not specified, and if any of the previous tax years are incorrect, signing this certificate could be seen as a false statement, potentially leading to investigation and even criminal prosecution.

COVID 19 impact

Just before the COVID 19 lock down in the UK, HMRC issued thousands more of these letters from their “Risk and Intelligence Service, Offshore” unit, to named individuals, and they had the same 30 day response expectation.  

Given the impact of COVID 19, many professional bodies lobbied HMRC to request an extension of this 30 day response window, but HMRC have refused to agree.

They have however, conceded that should liabilities become due as a result of a disclosure,  then a time to pay arrangement (TTP) can be agreed.  Arrangements are agreed on a ‘case by case’ basis and will be tailored to meet the taxpayer’s individual circumstances during these difficult and unprecedented times.

HMRC have also confirmed that they have no plans to issue any further letters at the present time, however they regularly review their plans for such correspondence, and expect to continue to send letters to taxpayers relating to their offshore affairs in due course.

If you have received one of these letters from HMRC, and need help and support to understand what to do next, please contact Lynn Gracie (lynn.gracie@aab.uk) , Carol Edwards (carol.edwards@aab.uk) or your usual AAB contact.

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