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Requirement to correct

Don't get caught out by overseas assets

Sean Wakeman, Partner, Head of Tax Resolutions
22/01/2024
lady on a lift with suitcase
Where undeclared taxes from overseas assets are discovered after 30 September 2018, HMRC will seek to charge a minimum penalty of 100%; 150% if a disclosure is prompted (up to a maximum of 200%) of the lost taxes. The only way to avoid these penalties is to claim a ‘reasonable excuse’.

Where undeclared taxes from overseas assets are discovered after 30 September 2018, HMRC seek to charge a minimum penalty of 100% of the lost taxes. The only way to avoid these penalties is to claim a ‘reasonable excuse'.

The legislation says, "where [a person] relied on any other person to do anything that cannot be a reasonable excuse unless [the person] took reasonable care to avoid the failure". This would therefore preclude reliance on any historic professional advice from an accountant, solicitor, or independent financial advisor for instance.

Spontaneous action taken now by affected persons to check their positions would assist a 'reasonable excuse' defence. Any firm involved in giving the original advice, the appointment of Trustees or assisting in any way with the establishment of an overseas structure, will be regarded as an 'interested person'. If the check is carried out by an 'interested person', it will be treated as 'disqualified' advice and hence disregarded. Any review should therefore be conducted by an independent third-party advisor other than the original advisors and, may require fresh legal opinion from unconnected Tax Counsel to see if the 'arrangements' remain robust or are otherwise flawed.

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Sean Wakeman
Sean Wakeman
Partner, Tax Resolutions
London