On 5 December 2016, HMRC published the consultation document tackling offshore tax evasion: A Requirement to Correct (RTC), which discussed the proposals to require any person, who has, undeclared UK tax liabilities in respect of an offshore interest to correct that situation by 30 September 2018, or face tougher new penalties for their “Failure to Correct (FTC)”.

The end date of 30 September 2018 corresponds with the date by which all countries committed to the OECD’s Common Reporting Standard (CRS) will be exchanging data with HMRC. Taxpayers who fail to correct historic errors in the ‘RTC period’ (6 April 2017 to 30 September 2018) face much tougher new penalties for their FTC. FTC penalties would be following:

  • A standard penalty of between 100% and 200% of the tax that has not been corrected;
  • A 10% asset-based penalty (relevant to ‘the most serious cases’ where tax underpaid in a tax year is greater than £25,000);
  • An enhanced penalty of 50% of the standard penalty amount if HMRC could show that assets or funds had been moved to attempt to avoid RTC; and
  • Naming and shaming of taxpayers ‘in the most serious cases’ (total loss of tax greater than £25,000).

These new penalties are far harsher than any chargeable under present legislation.