HMRC Crackdown of Overseas Assets and Bank Accounts
Under the Common Reporting Standard where there are more than 100 plus countries as members under the Organisation for Economic Co-operation and Development’s Common Reporting Standard (CRS)., will share information on foreign bank accounts and foreign financial investments to the HMRC.
This year 2018, many people may have or about to receive letters from HMRC entitled “Important: Your final opportunity to bring your worldwide tax affairs up to date”.
In case if you have received such information, it will be requested to complete and return a certificate with three options: –
- Declaration that you will declare any unpaid taxes using HMRC’s Worldwide Disclosure Facility
- Declaration that you have no overseas assets, OR
- Declaration that all taxes have been paid
It is strongly recommended that on receiving such letter, please do not ignore it. Historically in the past (for other tax amnesties), letters from HMRC of this kind have suggested that they have specific information which might indicate an under-declaration of tax.
Therefore, the certificate should be completed and returned to HMRC, with the appropriate box ticked.
If failed to respond or respond inaccurately, HMRC may investigate further and if the tax is found to be owed, HMRC will charge higher penalties and consider other action.
If more time is needed to respond to the certificate to assess, this can be requested from HMRC.
Please seek advice from an accountant or adviser familiar with these issues on your best approach.
According to the law, if income is taxed overseas, there is still a need to report that income on your UK tax return, except in certain circumstances. UK tax might still be due on that overseas income. This is the most common area where British resident mistake and confused.
At present, if a resident in the UK honestly declares their foreign assets before 30 September 2018, there are chances that the will have less penalties, however, in that case, if HMRC finds out about their assets and undisclosed money before being informed, in that situation, there can be high penalties.