Revenue has written to hundreds of thousands of taxpayers this week inviting them to disclose offshore matters. A copy of the standard letter is here.
Below are 5 key steps for dealing with your affairs going forward.
1. Consider the change in tax law and if it applies to you
This correspondence follows the Panama Leaks and a change in recent tax law which removes the right to make a qualifying disclosure in relation to offshore matters after 30 April 2017.
You should make a disclosure - in the prescribed format - if you have undisclosed offshore income or gains.
2. Make a disclosure before 30th April 2017
After 30 April 2017 it will no longer be possible to make a qualifying disclosure on issues that relate "directly or indirectly" to offshore matters. This could also affect disclosures of unrelated onshore matters.
After this date the current benefits that apply to voluntary disclosures will be withdrawn. These include reduced penalties, protection from publication and the guarantee of non-prosecution for tax offences..
3. Review the treatment of offshore funds and products in previous tax returns.
Given the very complex tax legislation governing offshore funds and the multitude of different products in the market, there could be cases where genuine mistakes have been made in the past.
You should review the tax treatment of offshore funds and similar products very carefully especially if you have any doubt about the correct tax treatment.
4. Note that the tax changes & offshore campaign apply to all taxpayers including PAYE workers
The changes in law and the deadline apply equally to all taxpayers - PAYE taxpayers, corporates etc.
5. Consider possible exemption from penalties
While a penalty will generally be sought by Revenue where tax has been underpaid, there are some circumstances where no penalty will apply.
A penalty will not apply to an underpayment of tax if the aggregate amount of tax/duty underpaid is less than €6,000 and the default is not "deliberate behaviour".
In addition, no penalty will apply once the matter is disclosed to Revenue:
• where an error is "self-corrected" within a set time limit.
• in the case of innocent error.
• where there is a "technical adjustment" arising from a difference in interpretation.
However, even though a penalty may not arise on an offshore matter, the matter itself must still be disclosed.
If you are impacted by these developments you should immediately speak with a tax consultant. To arrange a meeting with a tax consultant qualified in this area contact Derek Andrews by email or at +353 (0)1 6978012.
The taxes affected by this issue include income tax, capital gains tax, gift tax, inheritance tax, VAT, stamp duty and corporation tax.