The Requirement to Correct (RTC) legislation is HMRC’s last attempt to coerce taxpayers with links to offshore assets to review and regularise their historic tax affairs to ensure that they are correct.

The new legislation dictates that any entity in the world has an obligation to identify and disclose historic non-disclosure relating to UK Income Tax, Capital Gains Tax and Inheritance Tax. Failure to correct will mean:

  • Penalties of up to 300% of the potential lost revenue (minimum 100%),
  • A potential 10% asset-based penalty, and
  • Potential “naming and shaming”, whereby your name, address and details of tax underpaid are published by HMRC

Over the past few years there have been many favourable amnesties available to facilitate the disclosure of any historical income and gains linked to offshore assets.  HMRC are therefore taking a much stronger stance against any taxpayers who, in their eyes, opted not to disclose despite several prompts and opportunities.

With the introduction of the Common Reporting Standard and various Beneficial Ownership Registers, HMRC’s ability to access third party information in other jurisdictions has increased significantly. These new data sources will enable HMRC to more easily identify individuals who have not ensured that their tax affairs are up to date.

HMRC have made it clear that they will not hesitate to prosecute individuals where appropriate. Given the complexity of the UK tax legislation, it is therefore vital that all persons with any arrangement which has a UK connection undertake a review of their tax affairs.

What are the potential issues?

The RTC legislation was introduced to catch individuals who have taken specific structuring advice regarding their affairs but where implementation or operation have not been perfect.

The potential issues which could be caught include (but are not limited to):

  • Overseas income
  • Remittances to the UK
  • Constructive remittances (i.e. benefitting from the monies in the UK, even if funds were not physically transferred – for example, settling a UK debt, paying for a UK service or moving artwork to your UK home)
  • Tainting of capital accounts
  • Failure to pay the Remittance Basis Charge (RBC)
  • Trust structures
  • Overseas property
  • Transfer of Assets Abroad

The penalties for failing to correct can be very draconian and potentially out of proportion to the tax due.


At Lancaster Knox our Tax Investigation specialists are industry recognised and have dealt with hundreds of potentially contentious situations with HMRC over the years. We are adept at managing interactions with the tax authorities to ensure that the process runs smoothly and that your interests are best protected.

Lancaster Knox will work with you (and your current adviser, if applicable) to undertake a review of your affairs, arrange a UK tax disclosure if necessary prior to the 30 September 2018 deadline and ensure that HMRC do not seek to obtain information they are not entitled to.

If HMRC have already opened an enquiry or commenced an investigation into your affairs, either under COP8 or COP9, then please do get in contact as soon as possible so that we can ensure that the process is managed correctly and in a timely manner from the get-go, that HMRC receive the correct amount of tax and that the your interests are fully protected.