Offshore Income and Gains - Do You Need a Second Opinion?

In November 2017, the UK Parliament enacted Requirement to Correct (RTC) legislation; representing a fundamental shift on reliance placed on historic (pre-6 April 2017) tax advice on offshore matters. Whilst not explicitly retrospective, if HMRC disagree with such analysis, it has scope to levy penalties between 100% - 200% of the tax liability, impose a 10% asset based penalty and publicly “name and shame” offenders. Historically, if a taxpayer had sought appropriate tax advice this would typically protect them from penalties, however under the RTC regime this is no longer necessarily the case.

Individuals, companies and trustees with offshore interests should review their tax affairs to identify risk areas; and in some cases, seek a second opinion corroborating the original advice or correcting their UK tax position. This must be done by 30 September 2018. The deadline coincides with Common Reporting Standard (CRS) deadlines, when HMRC will receive significantly more information on offshore structures and offshore transfers under CRS reporting. 

The type of matters that asset managers may need to review are:

• Disguised investment management fee (DIMF) rules
• Carried interest received post July 2015
• Transfer pricing policies
• Dividends paid offshore
• Offshore remuneration structures

How can Duff & Phelps help?

Duff & Phelps' Regulatory Tax team are available to assist with assessing the status of your tax affairs through a risk assessment process tailored to your situation. Given the potential complexity of some offshore structures, it is our recommendation that taxpayers consider the potential impacts of RTC sooner rather than later.