As readers may already be aware, the requirement to correct (RTC) legislation takes effect later this year from 1 October 2018. HMRC have published guidance on this legislation.

The legislation means that a UK taxpayer must declare all their foreign income and assets where there might be tax to pay to HMRC before 30 September 2018 to avoid substantial penalties under the failure to correct legislation.

A recent discussion with HMRC highlighted that in scenarios where a taxpayer is under enquiry and they have an offshore matter, RTC penalties may still be chargeable if that enquiry is settled after the RTC deadline unless full disclosure is made to HMRC in advance of 30 September 2018.

Given that RTC can result in penalties of 200 percent, it is recommended that a discussion is had with the relevant HMRC Inspector in advance of 30 September.

In a recent update to its RTC guidance, HMRC has included details of what appears to be a non-statutory extension to the 30 September 2018 deadline but only in three sets of very specific circumstances.

A taxpayer will not be liable to penalties for failing to correct by 30 September 2018 in the following three limited circumstances where information is provided later:

• If, by midnight on 30 September 2018, you notify your intention to make a disclosure via HMRC’s Worldwide Disclosure Facility (WDF) by registering via HMRC’s Digital Disclosure Service (DDS).

The taxpayer will not be liable to penalties for any failure to correct provided the disclosure process is completed fully and accurately within the 90 day time limit required by the WDF.

No account will be taken of any extensions to the 90 day time limit (for example because the case is complex or a Non Statutory Clearance application is made) to the extent it reaches beyond 29 December 2018 when considering failure to correct penalties. Anyone wishing to register for the WDF by telephone must do so by 4pm on 28 September 2018.

To make the position absolutely clear – anyone registering for the DDS on or before 30 September 2018 must supply all of the required information by 29 December 2018 at the latest (or in the limited number of cases where the HMRC acknowledgement letter issues after 30 September, within the 90 day limit – see example 13A in HMRC’s guidance).

• On or before 30 September 2018 you email a completed form CDF1 to HMRC at centre.cop9@hmrc.gsi.gov.uk and inform HMRC that you wish to make a disclosure of deliberate behaviour involving offshore tax non-compliance via HMRC’s Contractual Disclosure Facility process (see section on ‘owning up to tax fraud voluntarily’ in the RTC guidance).

If your request is agreed and you submit your outline disclosure within the 60 day time limit stipulated in the process you will not be liable to penalties for the failure to correct any issue detailed in the outline disclosure.

• If HMRC is already undertaking an enquiry into your affairs and on or before 30 September 2018 you inform the person conducting the enquiry that you wish to make a disclosure of offshore tax non-compliance and you then submit an outline disclosure to that person by 29 November 2018, you will not be liable to penalties for the failure to correct any issue detailed in the outline disclosure.

The outline disclosure must provide details of the offshore tax non-compliance you have committed; the years involved; a summary of how the non-compliance came about; the amounts of tax that you believe you owe and a summary of the records that are available to help you make your disclosure.

We also understand that HMRC are currently issuing letters to taxpayers highlighting this legislation and the forthcoming deadline.