UNPAID OVERSEAS TAX IN SPAIN WILL BE ABLE TO BE CHARGED BACK UNDER NEW POWERS BY HMRC.

UNPAID OVERSEAS TAX IN SPAIN WILL BE ABLE TO BE CHARGED BACK UNDER NEW POWERS BY HMRC.

Tax Law

New laws will make it harder for Britons to hide undeclared rental income on properties in the Costa del Sol and on assets in many overseas countries from 1^st of January 2016. This will include holiday homes and personal properties. A new information sharing system between international banks is to be adopted to stop this kind of fraud.

A public campaign started last year is to inform potential tax fraudsters of its new powers. This has come into force from December 31^st 2015 once the LDF closes in 2016 (Liechtenstein Disclosure Facility)

Over 90 countries that also include Spain have signed the agreement allowing the HMRC to be able to look into bank and savings accounts in foreign countries going as far back as 20 years.

At this moment the LDF permits HMRC to investigate possible tax evasion in particular counties, but has not fully been put into effect. This new system will mean that all nationals’ financial information will be shared within the 90 countries. This will include all trust funds and personal properties. This could mean that HMRC will fine and sanction criminals for non-payment of tax.

Current records of HMRC show that the amount owed to the UK Treasury is approximately £565 million in non-paid taxes from British nationals who have hidden undeclared hidden wealth. The new system and minority who do hide assets abroad will face tougher sanctions.

These fines could be to the tune of 30% of the amount tax due as well as being made to pay the full amount outstanding. An amnesty was issued in 2009 by HMRC for all British nationals to settle up voluntarily their overseas tax bills without them receiving any fines or prosecution or nonpayment.

This saw HMRC receive a total of £1.6 billion paid back. But they are now doubling up their campaign after a change in the law from the Autumn Statement.

Before it was considered that only deliberate non-disclosing of tax could have been interpreted as a criminal act. But with the change in the law. Any non-disclosed tax offshore be it capital gains or income will now be considered as a criminal offence from this year onwards.

This will apply to UK residents who have a taxable income in Spain   or outside the country.

France and Spain will start sharing information with UK from January 2017. But anyone with undeclared assets and income will be asked to come forward now as the HMRC will be able to go back through 20 years’ worth of personal transactions.

Any British nationals who buy a property in Costa del Sol and Spain and have sought out the right legal advice should already be informed of what they have to declare when it comes to tax. If you do live in the UK and own Spanish property, we would always advise you to see the correct information and frequently asked question about property in Costa del Sol and Spain from a qualified solicitor or an IFA.