Requirement to Correct: What You Need to Know
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.
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:
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- Reviewing all UK tax affairs (such as previous returns) for individuals who currently have (or who have ever had) offshore financial interests.
- Reviewing of remittances, offshore structures, etc.
- Ensuring that tax returns were submitted for any years in which the taxpayer owed tax (either on income or gains).
- Checking advice received in the past – was the taxpayer updated on their obligations if their circumstances changed? Was the taxpayer informed of any new and relevant legislation?
- Performing ‘health checks’ of current and historic tax positions. This is a worthwhile exercise for any taxpayer with offshore financial connections – even if they feel certain they have not made any errors with submissions/notifications in the past – as the process will provide extra security should HMRC decide that additional tax may be due.
- Composing a defence and investigating the potential to appeal, should it appear that tax may be due or penalties are likely to be imposed.
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.
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I took advice about company and personal tax, they guided me professionally and gave valuable advice. That really helped me. Always recommend IBISS & Co Ltd as best tax advisor.
saady4u6/24/2019
IBISS & Co keeps on top of what we’re doing within the business, so that they can help us make important decisions. They explain the financial issues in language that we can understand! They are extremely professional as well as being approachable and friendly. I would never trust anyone else to take care of our accounting needs
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I instructed Ibiss and Co to handle my accounts for my two limited companies, one of which is a regulated law firm. I have been very happy and impressed with the service. The team at Ibiss and Co are very friendly and approachable and have the knowledge and expertise to ensure that the accounts were file properly and in time.
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