Everything you need to know about International Tax Compliance

Ercan Demiralay FCCA explains that if you have money or other assets abroad, you could owe tax in the UK.

Changes to the International Tax Compliance Regulations have created an obligation on financial institutions and relevant persons (including tax advisers) to inform their clients:

• that HMRC will soon be getting data on overseas financial accounts;

• that there are opportunities to come forward to make disclosures about overseas affairs;

• of the possible consequences for those who don’t come forward.

The reasoning behind the new notification requirement is that the revenue believes financial institutions and advisers know more than HMRC about whether clients have, or are likely to have, assets and income overseas.  It therefore wants to ensure that they make clients aware of their obligations to report this in a consistent manner.

What to do if you receive a notification letter

From 2016, HMRC is obtaining an unprecedented amount of information about people’s overseas accounts, structures, trusts, and investments. This is thanks to an agreement to increase global tax transparency between around 100 jurisdictions worldwide.

It provides HMRC with unprecedented levels of information to check that, as in most cases, the right tax has been paid. If you have already declared all your past and present income or gains to HMRC, including from overseas, you don’t need to worry.

You should check regularly that you have declared all of your UK tax liabilities because personal circumstances change.  For example, you may have recently inherited assets overseas which could alter your taxable profile. Tax laws change too, previous advice becomes out of date with the potential for costly consequences.

Penalties and the need for advice

If you are unsure, we recommend you speak to a tax adviser and find out whether you need to take action. Penalties are increasing for those who are not paying the right amount of tax on their offshore assets. Under new rules, you could face further penalties based on the value of an asset as well as the tax due. The important thing is to make your declarations before HMRC come looking for you!

The content of this post is up to date and relevant as at 12/01/2017.

Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.