A new legal requirement obliges anyone with undeclared UK income tax, CGT or IHT that involve offshore matters or transfers, to disclose the relevant information to HMRC by 30 September 2018 or face hefty new penalties, of a minimum of 100% of the tax involved, should the non-compliance subsequently be uncovered by HMRC. This particular requirement only applies if the non-compliance (whether deliberate or accidental) was committed before 6 April 2017 and if HMRC is within the applicable time limit to raise an assessment to recover the unpaid tax. (Broadly, where the taxpayer has not deliberately or carelessly understated the tax due, HMRC can raise an assessment within 4 years from the date on which the tax became due.)

The enhanced penalties for failure to correct under this requirement can be avoided if the taxpayer had a "reasonable excuse" although the tax will still have to be paid along with interest and standard penalties.

The legislation specifically provides that a reasonable excuse includes relying on professional advice. However this concession is limited and individuals will not be able to rely on advice if:

  • it concerned setting up tax avoidance arrangements which did not accord with established practice accepted by HMRC;
  • the adviser did not have appropriate expertise;
  • the advice failed to take account of all relevant circumstances; or
  • the advice was addressed to, or was given to, a person other than the taxpayer e.g. if advice was given to trustees but the tax liability fell on the settlor.

It is important to note that acting in reliance on professional advice will not necessarily prevent the more severe penalties from applying if HMRC find evidence of non-compliance (perhaps through data obtained via Common Reporting Standard (CRS) reporting) after the RTC deadline has expired. Anyone with offshore assets or arrangements should therefore check whether a full review of their affairs is necessary.