The British High Commission, in conjunction with Institute of Certified Public Accountants of Cyprus (ICPAC) and HM Revenue and Customs (HMRC), organised a seminar on 18 June to inform the Cypriot Accounting Community about the new UK Corporate Tax Law and forthcoming changes in UK Tax legislation.
The event informed the accounting profession about the new “Requirement to Correct”, that requires all UK taxpayers to declare to HMRC, before the 30 September 2018, all their foreign income and assets, where there might be tax to pay. From the 1 October 2018 new, substantially higher penalties will apply to UK taxpayers who have failed to pay all the tax due on foreign income and assets.
The vast majority of people and businesses pay the right amount of tax. The requirement to correct legislation is aimed at those who fail to pay the correct tax on their offshore income or assets. Many people may not realise that some straightforward actions, such as renting out a property in Cyprus or transferring income and assets from one country to another, could mean having to pay tax in the UK. This includes having income from or an asset in Cyprus or anywhere else in the world. These must all be declared to HMRC.
HMRC is therefore urging people to check they have paid the right tax on their offshore assets, before tougher penalties are introduced from 1 October 2018.
Although the Requirement to Correct applies to people who pay tax in the UK, it could still affect people if they live abroad and pay tax outside the UK, for example people who rent out their UK home whilst living in Cyprus or another country.
If you are concerned that you haven’t told HMRC about foreign income assets, or that you have transferred income abroad without paying the UK tax on it, you should make a disclosure to HMRC before the 30 September 2018. You could also consider taking independent professional advice before deciding what to do next.
Further guidance on how to inform HMRC via the Worldwide Disclosure Facility, including how to register and when payment is due, can be found on the HMRC website at: www.gov.uk/guidance/worldwide-disclosure-facility-make-a-disclosure
An HMRC official said:
“The UK Government is getting much tougher on offshore tax evasion. This is the last chance to put things right before tougher sanctions are introduced in 2018. Tax evasion is a crime, committed by a dishonest minority, which unfairly places a greater burden on the honest majority of people and businesses who pay the tax that they owe on time.
The Worldwide Disclosure Facility (WDF) gives people a last chance to come forward now to correct their past offshore liabilities and pay what is due, before tougher new sanctions and an unprecedented amount of data on those with offshore accounts in more than 100 jurisdictions is received under the CRS from September 2018.”
The event also outlined the new ‘Corporate Criminal Offences’ legislation, under which companies from anywhere in the world can be liable for failing to prevent their representatives facilitating UK tax evasion, whilst companies based in the UK or who carry out any part of their business in the UK are in scope for failing to prevent the facilitation of overseas tax evasion.
Corporations and partnerships can be held criminally liable when they fail to prevent their employees, agents, or others who provide services on their behalf from criminally facilitating tax evasion. This is a significant change from existing law under which they can only be found liable for criminally facilitating tax evasion if the most senior members of the organisation – typically the board of directors – are aware of the facilitation.
Companies can prepare themselves by putting in place procedures designed to prevent this and HMRC has published guidance to help with this: www.gov.uk/government/publications/corporate-offences-for-failing-to-prevent-criminal-facilitation-of-tax-evasion