Tax health checks and disclosures

Getting your relationship with HM Revenue & Customs (HMRC) in good shape

HM Revenue & Customs (“HMRC”) and other tax authorities across the world are increasing their focus on the tax gap and putting tax transparency at the top of their agenda. Tax compliance is more critical than ever. If you think you or your clients may not be completely compliant, the message is clear - tell HMRC or face increasingly severe consequences.

Whether you are an individual, a company or a trustee, if you need someone to review your tax position, make a voluntary disclosure, advise you through an investigation or support you in the event that criminal charges are threatened, we can advise.

Those with complex international tax affairs, are being invited to review their affairs and tell HMRC of any mistakes if necessary.  Many people are responding, prompted by:

1. The continuously changing and increasingly complex UK tax legislation

  • Changing tax rules of UK resident non-domiciled individuals, UK property and offshore trusts among others
  • Tax advice taken many years ago may no longer be valid
  • Third parties can inadvertently create tax problems, such as failure to correctly operate remittance rules for UK resident non domiciles

2. Increased global tax transparency means HMRC will have more data about you than ever before

  • Automatic exchange of financial information between countries
  • Introduction of registers for beneficial owners of company and trusts including settlors and beneficiaries
  • HMRC’s ability to collect and handle large amounts of data via ‘Connect’ e.g. property ownership

3. Last opportunity to come forward to HMRC

  • Introduction of a legal requirement to review affairs and correct errors relating to offshore interests
  • Last voluntary disclosure opportunity

4. Higher cost of getting it wrong

  • Increased tax related penalties for offshore offences
  • Reputational damage if HMRC name and shame you
  • HMRC’s aim to increase the number of prosecutions
  • Change in law to make it easier for HMRC to prosecute
Tax health check Disclose if necessary
  • We check whether your tax affairs are in the best shape
  • We identify risk areas based on our experience
  • We prepare a risk assessment and provide understanding of where there may be issues
There are several ways to approach HMRC, for example:
  • Relevant Campaigns
  • Contractual Disclosure Facility (Code of Practice 9)
  • Worldwide Disclosure Facility (from September 2016)
We have undertaken many health checks for all types of clients  and have relevant and varied international tax experience. Our global network is at your disposal and you can access PwC Legal if required.

For details on any of these approaches, please contact us. We identify the most appropriate and cost effective way of disclosing.

Understanding the landscape

Pre 2016

  • The Liechtenstein Disclosure Facility and The Crown Dependency Disclosure Facilities close to new registrations. 
  • Financial accounts at 31 December 2015 subject to due diligence before Automatic Exchange of Information (“AEoI”) under the Common Reporting Standard (“CRS”). 
  • Annual Tax on Enveloped Dwellings (“ATED”) charge of £7,000 introduced on properties worth between £1-2 million. 

January 2016

  • CRS takes effect for early adopters such as BVI, Gibraltar, Guernsey, Jersey, Isle of Man and UK. New accounts opened in jurisdictions who are committed to the CRS will require client self-certification. 

April 2016

  • HMRC in consultations to announce a new disclosure facility for those needing to make a voluntary disclosure. 
  • UK Companies required to keep a register of Persons with Significant Control (“PSC”).
  • New offshore penalty regime and strict liability criminal offence for offshore tax evasion to be introduced in the Finance Bill. 
  • Annual ATED charge of £3,500 in force on properties worth between £500,000 and £1 million. 

June 2016

  • UK companies to begin filing their register of PSC at Companies House. This will be publicly available.

September 2016

  • HMRC to access private data sets using their Connect software, e.g. UK land registry, banks, DVLA, etc.
  • New civil penalties for ‘enablers’ come into force.
  • HMRC receive data under UK FATCA regarding offshore accounts held in the Channel Islands, Isle of Man and the overseas territories.
  • New Worldwide Disclosure Facility starts on 5 September 2016
  • Consultation about Legal requirement to correct offshore tax errors by September 2018. 

January 2017

  • CRS takes effect for late adopters including Switzerland, Monaco, Singapore, Hong Kong.

April 2017

  • Changes to rules regarding UK Resident Non Domicile to be introduced (may be delayed). 
  • Countries in the European Union will be required to keep a register of beneficial owners under the 4th Anti-Money Laundering Directive. 
  • New civil penalties related to offshore evasion for individuals come into force.

September 2017

  • HMRC to receive information regarding offshore assets from all early adopter countries under CRS.
  • Commencement date for the corporate criminal offence of failure to prevent the facilitation of tax evasion

September 2018

  • HMRC to receive information regarding offshore assets from all late adopter countries under CRS. 
  • Closure of the new disclosure service facility.
  • Tougher, “failure to correct” penalties will apply to any outstanding tax liability identified from CRS information from this date forward