Taxpayers who make donations to charities in other countries can qualify for tax relief in the UK under certain circumstances. This means that UK charitable tax reliefs are available to certain organisations which are the equivalent of UK charities and Community Amateur Sports Clubs (CASCs) in the EU, Norway, Iceland and Liechtenstein (referred to as the EEA) provided they meet the UK tax definition of a charity. The charity would also need to be recognised by HMRC in order for taxpayers to claim relief.

The treatment of donations to charities outside the EEA area is different and in most cases the donations do not qualify for tax relief as the charities are not recognised entities for charitable purposes. For this reason, many large foreign charities that attract donations from the UK may decide to register with the Charity Commission in England and Wales. There are different rules in Scotland and Northern Ireland. This is quite a complex area and there are many requirements that must be met in order to register as a charity.

If the charity meets the UK definition of a charity, then UK higher rate or additional rate taxpayers, will be entitled to claim relief on the difference between the basic rate and their highest rate of tax made on an eligible donation.

For example:

If a taxpayer donated £5,000 to charity, the total value of the donation to the charity is £6,250. They can claim back additional tax back of:

• £1,250 if they pay tax at the higher rate of 40% (£6,250 × 20%),
• £1,562.50 if they pay tax at the additional rate of 45% (£6,250 × 20%) plus (£6,250 × 5%).

Higher rate or additional rate taxpayers have the option to carry back charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as the previous year’s Self-Assessment return is completed.

Following the end of the Brexit transition period, the process for exporting goods to the EU mirrors the process for all other international destinations.

Businesses, especially those that only trade with EU should by now be aware of the rules and be working accordingly. Businesses can make customs declarations themselves or hire a third party such as a courier, freight forwarder or customs agent to do the paperwork.

HMRC lists the following eight-steps that should be considered when exporting goods:

1. Check if you need to follow this process. The process listed below should be if you're moving goods permanently from: England, Wales or Scotland (Great Britain) to a country outside the UK or from Northern Ireland to a country outside the UK and the EU. There are different rules for goods that move between Great Britain and Northern Ireland or between Northern Ireland and the EU.
2. Check the rules for exporting your goods.
3. Get your business ready to export. This includes ensuring you have an Economic Operator Registration and Identification (EORI) number.
4. Decide who will make export declarations and transport the goods
5. Classify your goods.
6. Prepare the invoice and other documentation for your goods.
7. Get your goods through customs.
8. Keep invoices and records.

There are higher penalties for taxpayers evading Income Tax and Capital Gains Tax relating to offshore matters. HMRC’s compliance check notice entitledHigher penalties for offshore matters, has recently been updated to include details about penalties under the Requirement to Correct (RTC) legislation.

The RTC rules apply to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers relating to offshore tax non-compliance committed before 6 April 2017 (i.e. up to and including the 2015-16 tax year). With effect from 1 October 2018, any new disclosure relating to this (pre-6 April 2017) period will be subject to the new failure to correct (FTC) penalties. The FTC standard penalty will start at 200% of any tax liability not disclosed under the RTC, and cannot be reduced to less than 100% even with mitigation.

The existing penalty regime for other offshore matters remains as before, and is linked to the tax transparency of the territory in which the income or gain arises. There are three separate categories which correspond to the three penalty levels:

• Where the income or gain arises in a territory in ‘category 1’, the maximum penalty rate is 100% of the tax. These are territories that have agreed to exchange information automatically with the UK.
• Where the income or gain arises in a territory in ‘category 2’, the maximum penalty rate is 150% of the tax. These are territories that have agreed to exchange information with the UK but only when asked.
• Where the income or gain arises in a territory in ‘category 3’, the maximum penalty rate is 200% of the tax. These are territories that have not agreed to exchange information with the UK.

A breakdown of which territory is in which category can be found on the GOV.UK website. In certain circumstances, HMRC may reduce the amount of penalties due. The largest reductions are for unprompted disclosures. The penalty levied can also vary depending on whether the errors are careless, non-deliberate, deliberate or deliberate and concealed.

The Requirement to Correct (RTC) legislation created a new statutory obligation for taxpayers with undeclared UK tax liabilities that involve offshore matters. The RTC applies to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers relating to offshore tax non-compliance committed before 6 April 2017.

Information that is required to be provided to HMRC under the RTC rules must be provided to HMRC by 30 September 2018. This date coincides with the date when more than 100 countries will exchange data on financial accounts under the Common Reporting Standard (CRS). This data will significantly enhance HMRC’s ability to detect offshore non-compliance and it is in taxpayers’ interests to correct any non-compliance before that data is received.

Once the deadline ends, any new disclosure will be subject to the new Failure To Correct (FTC) penalties which are more punitive that the existing RTC penalties. Also, taxpayers risk being publicly named and shamed. The FTC standard penalty will start at 200% of any tax liability not disclosed under the RTC and cannot be reduced to less than 100% even with mitigation.

Any taxpayers that are unsure as to whether or not they need to make a disclosure are strongly encouraged to check their tax position. The RTC rules are very complex and we can help review any historic issues and advise and assist with making any necessary disclosures to HMRC. A disclosure can be made using the Worldwide Disclosure Facility or possibly using alternative disclosure methods which may be more suitable. HMRC’s guidance on making a disclosure, deadlines and penalty reductions under the RTC has been updated.

The Non-resident landlord (NRL) scheme is a special scheme for the UK rental income of non-resident landlords. This includes companies or trustees whose ‘usual place of abode’ is outside the UK. HMRC classifies a person living abroad for 6 months or more per year, as a non-resident landlord. Interestingly, this is the case even if the person is a UK resident for tax purposes.

Generally, basic rate tax (currently 20%) must be deducted, after expenses, from the rent payable to a non-resident landlord, either by the letting agent or where there is no letting agent by the tenants (unless the rent is minimal) and the tax paid over to HMRC within 30 days of the end of each tax quarter.

By using the NRL scheme, a non-resident landlord can apply for approval from HMRC to have any rents paid with no tax deducted. HMRC can refuse an application if it is not satisfied that the information provided by a non-resident landlord is correct or where there are concerns that the landlord will not properly comply with their UK tax obligations. 

Planning note

HMRC no longer send copies of the non-residents landlord scheme annual return form by post. Instead, the form known as the Annual Information Return (NRLY), is available on GOV.UK and should be submitted online or sent by post if online submission is not an option. The annual return for 2017-18 is due to be submitted by 5 July 2018.

If you are a non-resident landlord and would like assistance with completing the various returns or applications, please call.