Welcome to our new apprentices
November 8, 2023
By Chris Moir, head of trusts & estates at RMT Accountants & Business Advisors
One of the recurring themes of the campaigning in the lead up to the recent General Election was the focus that all political parties promised they would have on maximising tax revenues if they were returned to office, especially where illegal tax evasion was suspected.
Given both the political attention this matter has received, and the continuing pressure on the UK’s finances, you can be sure that the new Conservative administration will have it near the top of their To Do list.
One of the areas likely to be most in the taxman’s line of fire are assets held offshore on which the right amount of tax might not have been paid in previous years.
Over 90 countries have now committed to new international agreements that enable HMRC to see more about individuals’ overseas accounts, thus making the task of keeping such assets secret from the taxman far less likely than ever it’s previously been.
As HMRC themselves said in the guide they launched at the end of last year on how voluntary disclosures can be made in this area, “there’s nothing wrong with having investments overseas as long as you declare all taxable income and gains on your UK tax return.”
The guide explains why UK taxpayers must disclose information on overseas investments and assets to HMRC, how they should do so and what happens if they don’t.
The voluntary disclosure facilities that are now in place give people who have undeclared income and gains from overseas accounts the chance to “clear up their past tax affairs.”
Using these disclosure facilities will avoid the need for an investigation and may mean that a lower penalty might be applied – but with such a tax-related carrot, the accompanying stick is not far behind.
If you fail to declare your taxable income and HMRC then finds out, you will face an investigation and will have to pay both the undeclared tax and a penalty of up to double the tax you owe, and could also face the further threat of a prison sentence.
As ever with HMRC’s campaigns, a time limit has been set for people to make use of these voluntary disclosure facilities, with time running out on 31 December this year, as opposed to April 2016 as had originally been expected.
The Revenue’s own suggestion to those who think they might fall into this category is to get advice from an expert source who can “help you check your affairs and discuss the options if you need to make a disclosure.”
Generally speaking, when the taxman makes an suggestion like this, taking a bite of the carrot is a far better option than hoping that the stick won’t one day catch you by surprise.