HMRC Offshore Tax Investigation Time Limits

HMRC has opened a consultation into extending the time limit by which it can investigate offshore tax affairs.

HMRC proposes that a new 12 year time limit be imposed where there is unpaid tax through offshore non compliance. The current time periods to investigate offshore tax avoidance are four years, raising to six if the taxpayer has been deemed to be careless. A 20 year limit is applied where tax evasion and fraudulent activity is alleged.

The proposals were announced in the 2017 Budget with the consultation set to close in May 2018. HMRC intends to apply the new investigation time limits into offshore taxes from April 2019 as part of a continued clampdown on offshore tax avoidance and tax evasion.

To assist further, this year HMRC will automatically receive information about bank accounts held by UK individuals in over 100 countries under the Common Reporting Standard (CSR).

In addition to the announcement of the consultation, new penalties are set to be introduced in September 2018 for those who have made errors on their tax returns or failed to disclose offshore bank accounts or assets.

Requirement to Correct requires that individuals who have offshore bank accounts or assets that have not been declared to HMRC must do so prior to the September 2018 deadline. Failure to do so may result in high penalties, in some cases up to 200% of the unpaid tax.

Requirement to Correct relates to:

• Income arising from outside the UK.
• Bank accounts and assets held outside the UK.
• Activities carried out outside the UK relating to income or assets.

The clock is now ticking for individuals who have undeclared bank accounts and assets held offshore. This year, HMRC will have access to new information to assist them in bringing tax investigations against individuals with unpaid tax, and from April 2019 HMRC could have the flexibility to investigate unpaid back taxes for a longer period.

If you have a bank account or assets held offshore, you can discuss your circumstances with our experienced team. We can assist you in clarifying your affairs in complete confidence, and can advise you as to the best options to bring your tax affairs up to date.

To discuss your circumstances under no obligation, you can call us on 0113 387 5670, email us at enquiries@forthsonline.co.uk or fill out an Enquiry Form and we will contact you directly.