HMRC have published a response to their consultation earlier this year on ‘Tackling offshore tax evasion: Requirement to Correct’.

The original consultation proposed a requirement to correct (RTC) obligation for anyone with undeclared UK income tax, CGT or IHT liabilities. Taxpayers would have to correct the situation by September 2018 or face stiff penalties.

In response to feedback during the consultation HMRC have said that:

  • Penalties will be 100% - 200% of tax at stake, with reductions for disclosure and co-operation.
  • Taxpayers will only be able to rely on advice as a reasonable excuse if it was given by an independent person with appropriate expertise and is tailored to their specific circumstances.
  • The scope of the requirement RTC will be based on existing definitions of ‘offshore matter’ and ‘offshore transfer’, but will only apply to offshore transfers that took place on or before 5 April 2017.
  • There will be further discussions on how to improve awareness of the RTC once it is launched.
  • The usual assessment time limits will be extended so that tax doesn't fall out of time during the RTC window.
  • Taxpayers won’t have to calculate tax, interest and penalties themselves, just supply HMRC with enough information to calculate them.
  • No information on third parties will be required as part of the RTC.
  • There will be no extension of HMRC’s information powers.

Draft legislation introducing the new rules has been included in Finance Bill 2017.


Our subscriber guide: Penalties, offshore income, CGT & IHT

The response document and original consultation can be found here.