Undeclared Overseas Income and The Requirement to Correct

Undeclared overseas income is a guilty secret for some taxpayers. We have had over ten years of offshore disclosure facilities from HMRC which have forced a significant number to declare at least some of their overseas earnings. But now everything is about to change. The message for those with unreported offshore income and gains is clear – HMRC will become more aggressive if you do not report your undeclared overseas income by the September deadline.
Those who do not meet their obligations under the requirement to correct legislation and bring their UK tax affairs up to date could face penalties of up to 300% of the additional tax due. More than 100 countries have now signed up to the Common Reporting Standard and the relevant information is already being collected, ready for automatic exchange. If you are anxious about HMRC finding out about your undeclared overseas income you are not being paranoid – they are coming to get you!
Here is what HMRC themselves say,

• 30 September 2018 was chosen as the final date for corrections as this is the date by which more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS).
• CRS data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.
• To ensure there is an incentive for taxpayers to correct any offshore tax non-compliance on or before 30 September 2018 there are increased penalties for any failures to correct by that date.
• In the most serious cases, where the tax involved exceeds £25,000 in any tax year, and you knew you had relevant offshore non-compliance and didn’t correct it the asset based penalty at Schedule 22 to Finance Act 2016 will apply. This means a penalty of up to 10% of the value of assets connected to the failure will be charged. This is in addition to the standard penalty.

So if you have undeclared overseas income that you have not yet declared to HMRC, it is now time to take action before the 30th September deadline arrives in just a few months’ time. You can find further information from the  HMRC website but we strongly recommend getting professional advice to manage the declaration as soon as possible.