KPMG UK has warned offshore fund investors to check their tax reporting ahead of the 2018/19 tax return submission before HMRC does.
The firm highlighted how tax reporting for offshore fund investments is a complex area that wealth managers and tax advisers may have difficulties and because of this, HMRC is now paying extra attention to make sure it is reported correctly.
The consequences can be severe and will fall on the end investor, not the fund manager of their adviser. If an investor is found to have misreported, HMRC may be able to look as far back as the 2011/12 tax year and could potentially levee penalties of up to 200% of the tax owed.
KPMG UK tax director Iona Martin said: “Doing a tax return is hardly the highlight of anyone’s year but being faced with a hefty fine from HMRC would be even more of a lowlight. Offshore fund investing is a complex bit of the tax system and even if people have filed their reports the same way for years without any issues, it doesn’t mean they’ve been doing it correctly. HMRC is now on red alert and is using all powers available to it where taxpayers have been getting it wrong.
“If you invest via a fund or wealth manager, you’ll need to make sure you have ready access to the necessary information and there can be practical challenges, particularly if investing in a number of funds. So, any offshore fund investors would do well to just check with their advisor or manager ahead of submitting their returns this year. Anyone who waits for HMRC to tell them they’ve been getting it wrong will face a fine that’s potentially 50% higher than it would be otherwise.”
