HMRC is now starting to pay closer attention to the reporting of offshore income and gains that could lead to harsh penalties for those who have been filing their returns incorrectly.
A particular area where we have found individuals have not had a full understanding of their tax position, is with regards to offshore funds. These funds are broken down into two categories ‘Reporting’ and ‘Non-Reporting’ with both types having differing tax treatments. In short, ‘Reporting’ funds have a similar tax treatment to most other investments, apart from potentially having excess reportable income to include on the individual’s return. However, ‘Non-Reporting’ funds have their own rules when it comes to taxing any dividends. And, they are also subject to income tax (not capital gains tax) on any disposals.
At M&S, our knowledge and experience of the reporting requirements taxpayers have for both these types of funds, has helped a number of our existing clients to ensure that tax returns are submitted correctly. And for clients who have come to us after being contacted by HMRC in relation to off-shore matters, we have been able to ensure they made full disclosures to HMRC to correct their tax position. HMRC charges significant penalties for non-disclosure relating to off-shore matters, and by ensuring an accurate disclosure it helps keep these as low as possible. If you have already been notified by HMRC that you have a disclosure to make, or you would just like more guidance on whether you have been applying the correct treatment, then we are here to help.
More guidance on those who may be impacted can be found here https://www.accountancydaily.co/offshore-fund-investors-warned-check-tax-reporting