The 'Requirement to Correct' (RTC) and subsequent 'Failure to Correct' (FTC) regimes will have a significant impact on employers. The regimes can apply to employers with globally mobile employees as well as employers who make awards of non-UK shares to employees. It will be particularly relevant for employees on both long and short-term assignments as well as those employers who simply have Short Term Business Visitors coming to the UK or international commuters.
Whilst the RTC is a matter for individual taxpayers, employers will likely become involved where individuals have either offshore income or a UK tax obligation as a result of travelling for their work.Much as many employers support individual employees with tax return preparation and responding to Section 9A enquiries into individual returns, employees are likely to expect similar levels of support with any penalties levied as a result of an alleged Failure To Correct by HMRC.
Where employers have made errors in statutory reporting this may give rise to significant penalties for employees. To give an example, should an employer make an error in reporting (for example by producing an erroneous P60 or P11D) which misses an element of offshore income, this could result in penalties of up to 300% of the underpaid tax for the employee concerned if they have used this information to complete their tax return.
The attached guide gives some more specific examples of situations in which an FTC penalty could impact employers. If you have any further questions regarding employer's obligations and the RTC rules then please contact your usual PwC contact or alternatively: Matt Crawford (matt.d.crawford@pwc.com) or Nick Carling (nicolas.carling@pwc.com)
