What is the Requirement to Correct?
The Requirement to Correct is an obligation for taxpayers with assets overseas to correct any problems with their historic UK tax position. HMRC will seek out those who do not comply, whether it was through genuine mistake or carelessness or deliberate action.
To avoid incurring high penalties for non-compliance, taxpayers need to disclose any known or suspected unpaid tax on assets, income and activities in other countries and transfers from the UK to other countries.
What should you know?
No matter what amount of unpaid tax there is, it will need to be disclosed to HMRC. For example, if you have rented out a holiday home in another country and have not declared the income then you would need to make sure this has been checked. Also, anyone who has moved to the UK from another country and may have assets or income in their country of origin, need to make sure that their tax position has been declared.
We expect RTC to apply mainly to individual taxpayers given that it would apply to Inheritance Tax, Income Tax and Capital Gains. However, if for example your company is also a non-resident landlord, you should ensure that the correct tax amount has been made and perhaps make a disclosure if needed. Settlors, trustees and beneficiaries of trusts with overseas interests may also need to check if they need to disclose any unpaid tax.
When should this be done?
If you do need to make a correction under the RTC, this will need to be done by the 30th September deadline. From 1st October 2018, depending on circumstances, you could have a penalty of at least 100% of the owed tax, though it could be much higher.
How can we help?
As your accountants we always ensure that you are compliant with all legislation. We will always notify you of any issues and if we find that any corrections need to be made we can help you to declare this so as to avoid any penalties.
If you would like any more information on this topic or would like to discuss further, then please do not hesitate to contact us at partners@ergrove.co.uk or call 0121 559 1071.
