Our earlier blog on this issue can be read here. The Counter-Avoidance team has yet to give a definitive view on the subject because HMRCs Solicitor’s office are still considering some technical aspects relating to the legislation which you can view here.
Despite this, given the proximity to the 30 Sept deadline for receipt of Settlement applications by HMRC we have been given a view which sets out HMRC’s current understanding of the rules and how they interact with Disguised Remuneration avoidance arrangements.
Firstly, the RtC rules only apply where the non-compliance was committed before 6 April 2017. This is likely to cover the majority of your clients and/or potential clients. Therefore, the next rule to consider is the time limits governing whether HMRC can make an assessment to recover the tax arising from the offshore asset. The time limit for an assessment where the loss of tax is not due to careless or deliberate behaviour is 4 years from the end of the tax year of assessment in which the tax loss arises. Therefore, avoidance arrangements relevant to tax years prior to 2013/14 in most cases will not be caught, but those in 2013/14 onwards may be. There are some exceptions such as the tax year (prior to 13/14) is already under enquiry or the behaviour was careless/deliberate for example which can extend the time limit.
It would seem that taxpayers who have used a DOTAS registered scheme, where assessments have been made, would be outside of the scope of RtC. However, there may be some circumstances where the assessments are under assessed which may mean that a disclosure of the correct amount is required by the end of September. Therefore, if you have any clients where the assessments (Reg80 and/or S8) are deficient we would advise them to make a disclosure prior to the end of September.
HMRC have confirmed that a full and complete Settlement Pack would be sufficient for this purpose, where it relates to tax avoidance. Therefore, for those cases that have already provided a settlement pack to the Counter Avoidance mailbox or through Bedrock’s central contact this would meet the disclosure requirements.
Those taxpayers where HMRC are not aware of the scheme and/or the taxpayers use of a known scheme would appear to come within the scope of the RtC. Therefore, we would advise any of your clients who are not yet known to HMRC to make a disclosure to HMRC by the end of September. Particularly complex arrangements may require supporting information and documents.
Bedrock can help you and your clients understand more fully the published guidance in relation to the disclosure requirements and manage the process so that your clients don’t get caught out by the deadline of 30 September 2018 whether this is due to tax avoidance arrangements or the existence of other offshore accounts do give us a call on 0115 778 8533 or email email@example.com
The 30 September is also a significant date for any of your clients who may be looking to settle past tax planning arrangements if they want to avoid the impact of the 2019 Loan Charge. It’s critical that they take action today so do get in touch if you’d like to discuss how we can assist.