Offshore Trusts – Historic UK non compliance

The treatment of offshore trusts (and foundations) is a highly complex area of UK tax legislation that requires advice on creation but also continued specialist advice to ensure that they remain UK tax compliant throughout their operation.

From April 2017 the new “Requirement to Correct” legislation dictates that any entity in the world has an obligation to identify and disclose any historic non-disclosure. Failure to correct will mean penalties of up to 300% of the undeclared tax and a potential asset based penalty.

Offshore trusts have been a common planning tool for the UK tax adviser for many years. However the UK tax treatment of these trusts is highly complex, with many anti-avoidance rules that target the settlor, beneficiary and trustee. Given the complexity of the UK tax legislation, it is vital that trustees ensure that any arrangement which has a UK connection (either through settlor, beneficiary, trustee or asset situs) is reviewed regularly.

From April 2017 the Requirement to Correct (RTC) legislation requires all persons linked to offshore assets, or transfers, to review their historic affairs. Failure to correct will lead to penalties of up to 300%. This new requirement means that even historic errors could be viewed as deliberate through the deliberate action of not reviewing the structure in line with the RTC.

Please download our Briefing Note for further information.

If you are affected by the changes outlined, please contact Lancaster Knox for advice and guidance on the options available.

Download a PDF of the full resource