Those pieces of legislation are:
- The Requirement to Correct offshore tax errors, which imposes an obligation to correct any errors which related to non-UK income or gains in relation to Income Tax, Capital Gains Tax and Inheritance Tax before 30th September 2018
- The new corporate criminal offence of failing to prevent the facilitation of tax evasion.
Trustees, who are usually based in Jersey, Guernsey or the Isle of Man, are likely to be receiving enquiries from UK based clients about the implications for them of these two pieces of legislation as well as from clients or their advisers who are seeking to close the trust that was set up for them.
We are finding that people who have trust structures in place are becoming increasingly alarmed at the approach of the UK government and the use of legislation to correct errors that may have arisen even inadvertently. A failure to deal with the error could result in penalties of up to 200% of the tax liability and a further asset-based penalty of up to 10% of the value of an asset held outside the UK.
If HMRC go down the route of applying such penalties the only defence is for the taxpayer to demonstrate that ‘reasonable care’ has been taken to avoid the error. Practically that means evidencing the fact that independent advice has been taken before 30th September and that the advice concluded that there has been no error to report.
Bedrock Tax is working with a significant number of clients who are in this position and is helping them ensure they are not going to fall foul of the Requirement to Correct legislation by providing independent expert advice.
We have considerable experience of supporting clients who need to make a disclosure to HMRC or who are looking to reach a settlement with HMRC in respect of liabilities for historic tax avoidance. Time is of the essence given the 30th September deadline.
Trustees who are already reviewing the historic tax position of structures for which they undertake corporate or trustee services may be interested in using Bedrock’s services to assist with making any required submissions to HMRC.