Last November, we warned readers about something called the Requirement To Correct. As the deadline draws near, we thought it worthwhile to remind readers again about the scheme and why it’s absolutely vital you get up to speed with it if it applies to you.

Now, before you read on, the vast majority of people in this world are honest. The vast majority of the people in the UK have their heads screwed on the right way to and they realise the utter futility of taking HMRC on. It’s better just to be honest, be upfront, and pay them what you owe them.

The problem is that tax laws change all the time and something which Requirement To Correct now covers may not have been covered at the time the what-is-now-a-transgression would have been made.

HMRC know what they want and they know how to get it. HMRC are very serious about Requirement To Correct so here’s Burton Beavan’s guide to what you need to know and why you need to know it.

Undeclared offshore assets  – the Common Reporting Standard (CRS)

Starting on 1^st October 2018, 100 countries around the world, including the UK, will be able to provide each other with detailed financial data on people and on companies under CRS and with great ease.

We all saw with the “Paradise Papers” and the “Panama Papers” how HMRC will actively pursue those who they feel have deliberately avoided paying tax by simply not disclosing the financial interests or income streams from abroad.

From 1^st October 2018, it will be “Paradise Papers” every day as CRS will make much more visible every individual’s and corporation’s non-compliance with tax disclosure expectations.

Undeclared offshore assets – what are HMRC interested in exactly?

They’re interested in any tax which has not been paid on undeclared foreign property, overseas assets, investments, and the movement of money from one country to another. Under the Requirement To Correct scheme, all undeclared taxable income must be reported in full to HMRC by 30^th September 2018 for all financial affairs up to April 5^th 2017.

According to Gov.UK, they are specifically interested in:

• “art and antiques,
• bank and other savings accounts,
• boats,
• cash,
• debts owed to you,
• gold and silver articles,
• government securities,
• jewellery,
• land and buildings, including holiday timeshare,
• life assurance policies and pensions,
• other accounts, such as stockbroker or solicitor accounts,
• other bond deposits and loans including personal portfolio bonds,
• rights or intellectual property including image rights,
• stocks and shares,
• trusts including employee benefit trusts and self-employed persons trusts, and
• vehicles”

The advanced nature and capabilities of the CRS system is likely to mean that all of the assets and accounts listed above will become much easier for HMRC to find than ever before.

Undeclared offshore assets – What do I need to do under Requirement To Correct?

Declare everything before 30^th September 2018. You can do so by using their digital disclosure facility or speaking to an officer if you’re being investigated. But that might not be the best idea and we’ll tell you why at the end of this article.

Undeclared offshore assets – What are the penalties for failing to do so?

If you report on time, you will have to pay your outstanding taxes in full within 90 days and there will likely be some penalty you’ll have to budget for as well.

There will be a fine of between 100% and 200% if you miss the deadline. The less cooperative HMRC deem that you are, the higher the fine will be.

If they believe that you have shifted assets in such a way as to deliberately try to conceal their existence, HMRC reserve the right to fine you up to 300%.

Your name may also be published online and there may be an additional 10% asset penalty if the total of the undeclared tax is higher than £25,000.

Undeclared offshore assets – Do I need Burton Beavan’s help to comply?

There are 6-7 weeks until the deadline. Before you declare, it’s best to make sure that you’re going to declare everything and not inadvertently miss something out. That’s when the forensic analysis skills of a Burton Beavan accountant will help.

For help and support with Requirement To Correct, please call the Burton Beavan team on 01606 333900 or email hello@burtonbeavan.co.uk.