HMRC are increasing the number of letters issued to taxpayers from its Risk and Intelligence Service, Offshore department.
These letters advise taxpayers that they are required to potentially make a disclosure of any liabilities, present or past, which relate to offshore income and gains. It is expected that most individuals with assets offshore will receive a letter.
There have been changes in HMRC’s powers in relation to the access of taxpayer’s personal data. HMRC can now receive information as a result of the tax information exchange agreements with other countries, most commonly known as the Common Reporting Standard (“CRS”). There are currently 95 countries who have signed up to CRS or other relevant agreements and HMRC can as a result access information relating to bank accounts overseas, taxable income such as dividend or investment income and transactions relevant to capital matters, such as the sale of certain assets.
If you receive this letter and you are a client we will also be notified of this request. Any individual who receives a letter will need to take appropriate advice. If your tax returns have been prepared to declare your worldwide income correctly or, if you are non-domiciled, your relevant UK income and any remitted income or gains, then no further action will be necessary.
HMRC have confirmed that there is no legal obligation on individuals to complete the ‘Certificate of Tax Position’ certificate which typically accompanies the letter from HMRC. The letter and request is a separate one outside of the self-assessment requirements and separate to HMRC’s powers of enquiry into a tax return. Care needs to be taken in responding to these letters in order to reduce the exposure to a potential tax enquiry which can be raised into a tax return separately, based upon information disclosed in the letter itself.
For many individuals who may have made the mistake of not declaring the full details of their offshore income and gains, in many cases this can be down to genuine error or a misunderstanding of the UK tax system. We have experience in dealing with tax disclosures and have successfully worked to minimise penalties that can be issued by HMRC on late payment of tax.
Would you like help and advice on this or any other issue?
Please contact Amy Robins for further advice on the CRS and HMRC requests for more information by telephoning 01932 564098 or email us using our ‘Contact Us’ page.
This tax update was published in July 2019 – please be aware that the information above may have changed in subsequent months. This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.