Requirement to Correct regime is linked to the common reporting standard, which underpins the international information exchange agreements network. It allows over 100 jurisdictions to share tax and banking information with one another. There is no requirement for a specific request to be made.
By 30 September 2018, more than half of these jurisdictions are estimated to have exchanged data with the UK, which has resulted in HMRC obtaining information such as income streams and assets from which it can investigate whether there has been any non-compliance for UK tax purposes. The Requirement to Correct is an obligation for tax payers who have overseas undeclared income or assets to correct their UK tax position. It applies to income tax/capital gains tax/corporation tax and inheritance tax. The penalty under the Requirement to Correct regime is 200% of the tax owed .
If the individual assists HMRC with its enquiries, the maximum reduction in penalties is to 150%. However if an individual informs HMRC regarding the untaxed income by making an unprompted voluntary disclosure, the penalty can be reduced from 200% to 100%. Therefore it is in an individual’s interest to review their financial matters to check whether there are any sources of income/disposal of assets which fall into the UK tax regime.
Examples of where such an occasion may arise are:
- Overseas rental income being received from an overseas property
- Foreign pension
- Income through foreign investment accounts
- Working overseas under a self employment basis.
- Selling an overseas assets
Avery Clifton has advised many clients with disclosures to HMRC under voluntary and prompted situations under the Requirement to Correct regime. Contact us today on 0119 907 9224 for further information.