Taxpayers with cash or assets hidden offshore have only a few months to disclose them before tough penalties kick in, warns HM Revenue and Customs.
Later this year, HMRC proposes to change the time limits for investigating offshore tax cases to 12 years.
“HMRC is extending the time limit because it can take much longer to establish the facts about offshore transactions, particularly if they involve complex offshore structures,” said a spokesman.
“More time is needed to address situations where the current assessment time limits of 4 and 6 years for offshore non-compliance are not long enough to establish the facts and determine and assess the amount of tax due.”
Coupled with the new penalty regime that starts on October 1, HMRC is taking a much tougher approach against offshore tax dodgers.
No safe havens
Director general for customer strategy and tax design at HMRC, David Richardson, explained that taxpayers need to declare their offshore quicker or risk much heavier fines.
“Everyone has to pay their tax, and most people and businesses do. It’s on their behalf that we’re cracking down on offshore tax cheats,” he said.
“These new penalties are part of the government’s drive to ensure there are no safe havens for taxpayers that seek to evade paying tax. HMRC already holds a vast amount of data on offshore assets, and this is growing all the time.
“Many taxpayers with offshore assets already disclose them in line with UK law so have nothing to worry about, but time is running out for the minority of tax dodgers.”
Richardson also explained that some taxpayers may not realise they have a UK tax liability that should be declared.
What is offshore income?
“They must declare their overseas income to HMRC if, for example, they have worked overseas or are receiving income from a rental property outside the UK,” he said.
To help, HMRC has published an online guide explaining 10 points about offshore tax.
The guide covers issues from what is offshore income to where to find advice about declaring income for expats.
“As long as you declare all taxable income and gains on your UK tax return you have nothing to worry about. If you’re confident that your tax affairs are up to date, you don’t need to do anything further. If you’re unsure, we recommend that you speak to an adviser,” says the advice.