Consultation response: Simplifying the taxation of offshore interest

The Association of Tax Technicians (ATT) has responded to the HMRC consultation: Simplifying the Taxation of Offshore Interest. 

The consultation explores issues arising from the requirement to report offshore interest based on the UK tax year. It considers the option to tax offshore interest based on the amount arising over the year ended 31 December that ends in the UK tax year instead, to better align with how offshore interest is reported both to taxpayers and to HMRC. 

The ATT response highlights the following concerns with the proposal, and makes an alternative suggestion:

• Different reporting periods would apply to offshore interest and UK interest, and potentially between offshore interest and other types of offshore income. 
• The change should be considered for all offshore income types together to maximise the potential simplification benefits. 
• Some overseas jurisdictions do not report income based on the calendar year, so the proposal would add complexity in some cases. 
• Enabling pre-population of offshore interest data into PAYE codes may appear beneficial, but current systems and processes do not fully support this, particularly for agents. 
• It may be better to align the reporting period for UK tax purposes with the relevant overseas fiscal year end. 
• Self-Assessment taxpayers should be able to elect for an alternative basis period where appropriate. 

Further details can be found in the ATT's full response.