The published document by the government recognised that taxpayers who have not correctly reported their offshore income and gains to HMRC “might not have done so deliberately” and for a host of different reasons.
LITRG said that the document demonstrated a “refreshing shift of focus” from offshore tax compliance measures which were introduced in recent years.
For example, in 2017 the Requirement to Correct (RTC) was introduced, under which penalties of up to 200% of the unpaid tax can apply – regardless of whether or not the “non-disclosure of the offshore income was deliberate”.
Additionally, in 2019, the time limit for HMRC to assess UK tax on offshore income and gains was extended to 12 years, even in cases where a taxpayer has taken “reasonable care”.
Kelly Sizer, senior technical manager, LITRG, said: “We support such an approach, and we hope that these changes will mean it is less likely for vulnerable and unrepresented taxpayers to fall foul of harsh compliance regimes designed with deliberate tax evaders in mind.
“In addition, HMRC appear open to suggestions on how they can improve guidance they provide to taxpayers in relation to their offshore tax obligations, as well as improving their public communications efforts. For unrepresented taxpayers, both points are critical. We look forward to providing HMRC with a considered response to this consultation.”