• Do You Have RTC?

    Do you have a RTC?

    Sounds like something anti-social! HMRC would agree.

    A RTC is a "Requirement To Correct". The concept has been introduced by HMRC in a consultation document. Basically, if your offshore tax affairs are not in order, you will have a RTC. If the RTC is not sorted by the deadline, you will be guilty of a FTC ("Failure To Correct"). A FTC will give rise to very high penalties and publication.

    HMRC have said

    "In doing so, the measure will drive taxpayers with offshore interests to review their affairs to either:

    ● assure themselves that their offshore interests have been treated correctly for tax purposes, or

    ● to identify the incorrect tax treatment and put it right by notifying HMRC to ensure the appropriate tax, interest and penalties can be charged."

    HMRC are trying to drive taxpayers with offshore interests to review their affairs. I have been trying to get taxpayers to that for years (See Offshore Tax Health Check)

    What is HMRC trying to do?

    HMRC is trying to tackle offshore evasion and this is the focus of "Tackling Offshore Tax Evasion: A Requirement To Correct". Effectively, it is saying check all aspects of your offshore interests including compliance aspects. If there is a problem, get it sorted before HMRC find you. Given the huge amount of information that they will be getting over the next couple of years, it is likely that they will find out about your Offshore affairs.

    If you review your Offshore affairs and everything checks out, then you can rest easy. But even if you find you have no tax to pay but have not met all the compliance requirements, you still have a Requirement To Correct. For example, you may have missed a couple of entries on your returns or didn't give HMRC a notification A Failure To Correct will arise if you do not remedy it and penalties and publication may result.

    After reviewing your affairs, you find that there is tax to pay, you need to make a disclosure.

    What Should You Do?

    Review your offshore tax affairs. (For "offshore", read "international") Contact your tax advisor if you need to. If you have not been given tax advice from a tax advisor, you probably need one. Offshore tax is a complex area of tax and specialist advice is usually necessary.

    If you have a RTC, then you need to correct it as soon as possible. All previous Disclosure Facilities were cancelled and are being replaced by a Worldwide Disclosure Facility ("WDF") to be launched on 5 September 2016. HMRC want you use the WDF and to disclose in a digital format. Presumably this is to allow them to easily check the information which will start to become available to them from September 2016 onwards (via FATCA and CRS). The volume of information will increase exponentially from September 2017 onwards.

    When Should You Disclose?

    AS SOON AS POSSIBLE

    It is expected that the Worldwide Disclosure Facility will give no special advantages other than convenience. The RTC/FTC window will start in April 2017 and last 18 months to September 2018. After that the FTC penalies will kick in. The regime is being designed to remove any incentives to delay making the disclosure.

    Can I Avoid Disclosing?

    If you do not disclose and you are caught by HMRC, you will be the subject of severe penalties. FATCA and CRS means that HMRC will get information from over 100 countries including what are commonly know as Tax Havens.

    If you try to move your assets to a jurisdiction in order to avoid an exchange of information and get caught, the penalties will be increased.

    If you have not evaded tax i.e. acted illegally and met all the compliance requirements, you have nothing to disclose. It is not unreasonable to think that HMRC will ask you to prove this if your Offshore affairs come to their attention.

    We can help

    We can help

    - Reviewing Offshore structures

    - Making a disclosure should that be necessary

    Feel free to contact Bernard O'Kelly on +44 1624 614955 or email bernard@fiostax.com

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