Thousands of taxpayers are receiving HMRC letters warning them to disclose information of undeclared foreign income by 30 September. Otherwise, they will face penalties. Undeclared assets could include savings accounts, debts owed, government securities, and rights or intellectual property.
To further eradicate tax evasion, HMRC is putting together more than 3,200 with over 100 countries. This new network will be called the Common Reporting Standard. It will allow countries to exchange a collection of personal data about taxpayers including their names, addresses, and capital gains. This data will significantly enhance HMRC’s ability to detect offshore non-compliance.
The standard will come into effect at the same time as the Requirement To Correct (RTC) legislation that will create an obligation for taxpayers with undeclared tax liabilities to disclose information by the mentioned deadline.
Requirement To Correct (RTC) is formed to prevent more than 50,000 taxpayers who HMRC believes use schemes to allow them to avoid paying income tax by using loans and overseas trusts. It also applies to UK source income that was moved overseas before 6 April 2017.
Other targeted individuals are those who have moved to the UK from overseas and still own assets or income from their original country.
From 1 October 2018, penalties can arise to up to 200% on any tax not declared and further 10% for asset-geared penalties. There will also be extra penalties where assets or funds are hidden to avoid detection.