Requirement to Correct: What You Need to Know

What is the Requirement to Correct?

From 6th April 2017, the Requirement to Correct rule was established to encourage taxpayers to improve accuracy with regard to foreign income reporting.

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All taxpayers with overseas interests and issues with their tax position (such as historic undisclosed income) will be affected by RTC – and it’s important to act sooner rather than later. Failure to correct any issues by the deadline may result in the imposition of severe penalties. Bear in mind, too, that this requirement doesn’t only cover income tax. The scheme encompasses various tax areas (capital gains and inheritance tax, for instance) and set-ups (including partnerships and trustees).

When is the deadline?

The initial Requirement to Correct period commenced on 6 April 2017, with the stricter Failure to Correct scheme beginning on the 1st October 2018. Under RTC, taxpayers needed to be able to demonstrate that they had taken steps to amend their UK tax position by 30th September in order to avoid the harsher penalties of FTC (though in certain circumstances it was possible to procure an extension to the deadline).

How can IBISS & Co help?

The pressures of running a business or managing assets overseas are considerable: as such, it’s easy to miss deadlines or make mistakes with accounting. However, even the smallest of historic mistakes – if undisclosed – can cause real problems under the Requirement to Correct scheme.

Our specialist skillset – with a team of chartered accountants and expert tax advisers in our employ, many of whom have years of experience with overseas clients – makes us uniquely qualified to assist with all Requirement to Correct/Failure to Correct issues. Our list of services include:

Requirement to Correct: What To Do Now

The 30th September deadline may have passed, but there is still time to act. Harsh penalties (up to 200 of the tax due) and additional fines (including asset-based charges) will be levied if HMRC believes that a taxpayer has failed to make a disclosure, so it is imperative to instruct a chartered tax adviser to review your position as soon as possible.

Please contact us if you need further advice, have any questions about our services, or would like a free consultation or a fixed quote.

Want further accounting advice? Get in touch with your local IBISS & Co branch

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