Those with offshore assets, income or gains are being treated differently from other taxpayers in terms of HM Revenue & Customs’ (HMRC) approach to the impact of COVID-19, warns Fiona Fernie.
Whilst many taxpayers with enquiries which are already open have been offered the opportunity to have those enquiries suspended, and others have been given extended deadlines for producing information, HMRC have confirmed that they do not intend to extend the deadline for responses to letters sent out recently, to those with offshore assets asking for further details of offshore assets, income and gains.
It seems extraordinary that, at a time when other taxpayers are being offered the chance to temporarily suspend enquiries or delay responses to HMRC’s questions, those with offshore assets are still being put under pressure and are expected to request further time to produce information if they are struggling. Not only is it likely that the current circumstances will make it more difficult for taxpayers to obtain the relevant details to answer HMRC’s questions, many taxpayers will find the need to ask for an extension of time a very stressful process, when they already have more than enough anxiety to deal with.
It also seems somewhat strange that HMRC are pursuing these lines of enquiry, which in our experience often result in taxpayers demonstrating to HMRC that their UK tax affairs are fully compliant, rather than dedicating available resources to completing longstanding open enquiries, particularly in cases where they already been provided with a significant amount of information.
HMRC should be sensitive to the difficulties which many taxpayers are experiencing during the current pandemic, but in the majority of cases already under enquiry it would be beneficial for both the taxpayers and HMRC to progress the enquiries to a conclusion. Although not all of those enquiries will yield any significant amount of tax, I question whether these ‘offshore’ letters will produce enough tax to be worth HMRC dedicating resources to this initiative rather than to the normal enquiry process.
I am also concerned that those with offshore assets, income and gains will feel that they are being singled out for harsher treatment than other taxpayers.
In recent years there has been a whole raft of legislation which appears to penalise those with offshore interests and many such taxpayers will consider this to be another attempt to focus attention on them unfairly.
If you would like to discuss any of the above or have other queries about how you can make the right decisions for the future of your business and your income, please contact your usual Blick Rothenberg contact or Fiona Fernie.
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