Helping taxpayers get offshore tax right, Consultation outcome

HMRC have published the outcome of the consultation, 'Helping taxpayers get offshore tax right'. The March 2021 consultation sought views on how to improve offshore tax compliance and prevent mistakes. It formed part of HMRC's 'No Safe Havens 2019' strategy.

As part of the consultation, HMRC held five workshops with a cross-section of interested parties and held two separate meetings with PwC and KPMG, giving rise to 54 responses. Additionally, 24 written responses were received.

Comments had been invited on:

• The cause of offshore non-compliance.
  • In the main, the comments agreed that the complexity of UK legislation taxing non-UK income, gains and assets contributed to offshore non-compliance.
• The possible approaches suggested by the consultation.
  • The use of data obtained through the Automatic Exchange of Information (AEOI) at an early point in a taxpayer's registration of self-assessment would help to get the offshore tax correct in the first instance.
    • Most respondents considered this to be helpful although there were concerns about sharing sensitive information.
    • In response to these concerns, the government is considering a pilot scheme to trial such data sharing.
  • All respondents agreed that reminding taxpayers about assets held offshore would be worthwhile. 
  • Most respondents rejected HMRC's proposal to require taxpayers to provide further data about the offshore income being declared. Instead, it was felt that the current issues with data matching and analysis should be improved first.
  • Many were of the view that if discrepancies arose in data held due to the mismatch between the UK tax year and the calendar, it would be preferable to change the tax year to match the calendar year. This was rejected by the government.
  • Most respondents agreed that HMRC needed to do more to raise awareness of offshore tax and taxpayers' responsibilities. The government recognised this as an issue and is currently considering a 'one-stop shop' on Gov.uk to support taxpayers, amongst other ideas.
  • The government acknowledged responses citing open communication between HMRC and intermediaries (agents, professional bodies and financial institutions) as critical to compliance.

Next steps

• HMRC has already created an Offshore Forum with agents and other intermediaries.
• A continued programme of communications and education is being rolled out over a number of platforms.
• The process of developing and assessing the ideas received in the responses is underway and will be an ongoing exercise.

This consultation and responses were published in tandem with Preventing and Collecting International Tax Debt.

Useful guides on this topic

Offshore Income Tax Toolkit
This toolkit provides an outline of the tax issues for UK resident individuals with offshore income and investments.

Offshore income and gains: there are No Safe Havens
Following this year’s spring statement HMRC published its updated strategy on tackling offshore tax compliance, ‘No Safe Havens 2019’ which extended it’s 2014 aims by targeting offshore avoidance as well as evasion.

Penalties: Offshore Income, CGT & IHT
A new system of increased tax-geared penalties was introduced from 6 April 2011 in respect of errors and failures relating to offshore income and capital gains tax (CGT).

External links

Helping taxpayers get offshore tax right - discussion document

Helping taxpayers get offshore tax right - summary of responses

Preventing and Collecting International Tax Debt