HMRC has sent out thousands of warning letters to UK residents who hold assets abroad, or make money abroad. People with rental properties abroad or investments must make a inform HMRC of any income they make. HMRC claim one in ten UK taxpayers has a financial interest offshore. HM Revenue & Customs has access to considerable new amounts of international tax data available to them. They have also been given tougher penalty powers to fine people they deem to not have declared assets.
Tax Experts indicate HMRC is cracking down on unpaid taxes to help fund the coronavirus recovery. Since 2018 over one hundred countries signed an agreement to share the financial interest of millions of Britons. This helps the Tax Office to narrow down their efforts. Additional powers given to them means HMRC can issue penalties worth up to double the amount of tax owed to them. They can also demand unpaid tax going back 12 years. This is twice what it is was previously.
HMRC also sent tens of thousands of nudge letters last year to UK residents who were ascertained to hold money or assets abroad. The letters that have recently been sent are to a follow-up.
We cover Offshore Disclosure in greater detail here. Paying UK tax on overseas gains is often overlooked by UK taxpayers. It is a common misconception that if tax has already been paid in the local country, it doesn’t need to be paid in the UK as well.
Looking for expert tax advice is the most important thing you need to do. You also need to do it as early as possible in the process. It’s important you speak to advisers who have a detailed knowledge of the UK tax system, and they know how to interpret HMRC guidance and tax legislation.
At Kinsella Tax we have an expert understanding of the pitfalls to avoid and the best course of action to undertake. In some examples, there may not be any tax to pay. We can advise how you may present this to HMRC. On the flip side, where there are taxes to pay, it is important to be upfront and identify where the potential misunderstanding arose. We can help you fully cooperate and be proactive with HMRC, limiting any potential fines or penalties.
If you would like more information please contact us. We are available at Kinsella Tax to offer advice on your Tax and VAT affairs. Call us on 0800 471 4546 or you can contact us here.