Advisers should ensure they alert any clients holding offshore assets to a looming HM Revenue & Customs reporting deadline, Fiona Fernie, disputes resolution partner at tax advisory firm Blick Rothenberg, has warned, as she branded the tax offices communication ineffective.
In recent weeks HMRC has been sending so called ‘nudge letters’ to taxpayers who are believed to have offshore assets which may give rise to income and gains attracting UK tax.
The deadline for individuals to respond and declare the assets they have offshore is 30 September. Individuals who do not make a declaration in advance of that date face penalties of up to 200 per cent of the tax owed and 10 per cent of the value of the asset on which the tax has not been paid.
These rules fall under the 'Requirement to Correct' (RTC) legislation.
Ms Fernie said she has concerns HMRC has not done enough to alert individuals to the consequences of missing the deadline.
She said: "The letters have been in a number of different formats according to whether HMRC has specific information about offshore assets and what the source of that information is.
"However the thrust of all the letters is the same – if taxpayers have undeclared offshore income and gains which should have been reported for UK tax purposes, it is important that they make a disclosure before 30 September 2018 to avoid the possibility of draconian penalties."
She added letters being sent out in recent weeks, just a couple of months prior to the deadline, were "too little too late".
Ms Fernie said: "Whilst those of us in the profession are very familiar with the terms of the RTC legislation, to date there has not been a huge amount of wide-spread ‘advertising’ of the new legislation.
"This means that the 'nudge letters' may be insufficient to ensure that taxpayers review and make any amendments to their tax reporting prior to 30 September.
"After all, many of the letters we are seeing have been issued in recent weeks - at the height of the holiday period.
"By the time taxpayers return from vacation and realise that they may have an issue, there may not be enough time left to carry out the necessary review and make a disclosure to HMRC before the deadline."
A HMRC representative said it has communicated the deadline in a variety of ways in recent months, including via social media, and through working with UK embassies in other jurisdictions.
The spokesman added the deadline and the penalties for non compliance had been widely highlighted in the media.