Low awareness of a new UK law that means taxpayers must check and correct their liabilities by 30 September or risk hefty fines has led Her Majesty’s Revenue & Customs (HMRC) to publish a guidance on it.
Under the ‘Requirement To Correct’ (RTC) legislation, UK taxpayers with overseas income or gains, including investments and accounts, may be required to tell HMRC about them. This scenario applies when renting out an overseas property and may also include transferring income or assets from one country to another.
By ‘overseas’, HMRC means the Channel Islands, the Isle of Man, the Republic of Ireland, the European Union or anywhere else in the world. The RTC legislation may also apply to those who live overseas and pay tax outside of the UK - for example, people who rent out a UK home while living overseas.
But Dawn Register, partner in the tax dispute resolution team at accountants BDO, said that awareness of RTC had remained low, despite HMRC sending out a series of letters about it.
“For some, letters that arrived over the summer are very late in the day, with little time to carry out all the necessary requirements,” she pointed out. “This has perhaps left many taxpayers with the dilemma of whether to stick their head above the parapet or risk severe new penalties for not doing so."
According to Alliott Chartered Accountants, taxpayers should tell HMRC about overseas income or gains, which may include:
- Overseas bank accounts, even if tax has been deducted on interest and even if you have not made any withdrawals;
- Bond deposits and loans;
- Stocks and shares;
- Rental income from land and buildings, including timeshares and similar arrangements;
- Disposal of assets such as art, antiques, jewellery and property;
- Incorrect claims for Overseas Workday Relief;
- Incorrect claims for Foreign Tax Credit Relief;
- Undeclared taxable remittances to the UK;
- UK income or gains received abroad while you are living overseas.
HMRC will now impose much harsher penalties on unpaid tax due on overseas income and assets. A penalty will amount to a standard 200% of the tax due if it could have been reported under the RTC arrangement.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
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Low awareness of a new UK law that means taxpayers must check and correct their liabilities by 30 September or risk hefty fines has led Her Majesty’s Revenue & Customs (HMRC) to publish a guidance on it.
Under the ‘Requirement To Correct’ (RTC) legislation, UK taxpayers with overseas income or gains, including investments and accounts, may be required to tell HMRC about them. This scenario applies when renting out an overseas property and may also include transferring income or assets from one country to another.
By ‘overseas’, HMRC means the Channel Islands, the Isle of Man, the Republic of Ireland, the European Union or anywhere else in the world. The RTC legislation may also apply to those who live overseas and pay tax outside of the UK - for example, people who rent out a UK home while living overseas.
But Dawn Register, partner in the tax dispute resolution team at accountants BDO, said that awareness of RTC had remained low, despite HMRC sending out a series of letters about it.
“For some, letters that arrived over the summer are very late in the day, with little time to carry out all the necessary requirements,” she pointed out. “This has perhaps left many taxpayers with the dilemma of whether to stick their head above the parapet or risk severe new penalties for not doing so."
According to Alliott Chartered Accountants, taxpayers should tell HMRC about overseas income or gains, which may include:
- Overseas bank accounts, even if tax has been deducted on interest and even if you have not made any withdrawals;
- Bond deposits and loans;
- Stocks and shares;
- Rental income from land and buildings, including timeshares and similar arrangements;
- Disposal of assets such as art, antiques, jewellery and property;
- Incorrect claims for Overseas Workday Relief;
- Incorrect claims for Foreign Tax Credit Relief;
- Undeclared taxable remittances to the UK;
- UK income or gains received abroad while you are living overseas.
HMRC will now impose much harsher penalties on unpaid tax due on overseas income and assets. A penalty will amount to a standard 200% of the tax due if it could have been reported under the RTC arrangement.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
OTHER ARTICLES THAT MAY INTEREST YOU
Deciphering PAYE complexities for UK staff with an international remit
The UK and crown dependencies: Understanding the tax difference
HMRC publishes guidance on how to engage with UK umbrella companies
