HMRC has access to financial data worldwide. One of the main principles of UK tax law is that all UK residents must declare their income and profits from their foreign accounts to HMRC. Also, HMRC has begun a campaign against people who have unreported foreign income.
In 2019, HMRC updated its plan to include punitive penalties for those who fail to report their offshore accounts.
Why do you need to Declare it to HMRC?
- Avoid high penalties - HMRC has advised UK taxpayers that declaring foreign bank accounts or offshore assets is required for the UK residents. Penalties can be charged if legal authorities come into force.
- The requirement to Correct - The new legislation or renewed law 2019 "Requirement to Correct" mandates taxpayers in the United Kingdom to notify tax authorities about their abroad liabilities for UK inheritance tax, capital gain tax and income tax.
Transferring assets or profits from a foreign country to the home country, as well as buying or renting a property abroad, means the taxpayer has to pay a tax bill. Even if you live in another country and buy or rent a property in the UK, you must report it to HMRC and pay tax on it.
How to correct Tax Liabilities?
To correct tax liabilities, Taxpayers can
- Use HMRC's digital disclosure service as an international disclosure facility or any other services that HMRC offers for correcting their tax non-compliance.
- Inform an HMRC official at the time of the affairs.
- Other procedures can only be used after taking permission from HMRC.