Overseas assets, income, or gains

Published by Claire Haverson on 30 October 2023

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We have seen a marked increase in ‘nudge’ letters to individuals suspected of having unreported offshore income or gains from overseas assets.

Why me?

HMRC receive large amounts of information from overseas authorities, and this is used to send letters to those identified as receiving offshore income.

Perhaps you have a holiday home in Spain and let it to other holidaymakers, or you have a Jersey bank account earning interest. Did you realise you need to tell HMRC about this?

It may surprise you to learn that if you are UK resident and domiciled for tax purposes, you are taxable in the UK on your Worldwide income and gains. If you are UK resident and non-domiciled, the position can be more complex and further advice will be needed.

It may be that you have already paid tax in the other country. If this is the case, you will receive credit for the foreign tax paid, which could mean there is no UK liability. The UK has double taxation agreements with some countries, and therefore specialist advice is recommended to check the correct amount of foreign tax has been claimed.

It is important not to ignore a nudge letter, as doing so could lead to further action from HMRC in the form of an enquiry into your tax affairs for which the penalties can be much higher.

If you engage us to help, we will undertake a thorough review of your tax position and identify any sources of offshore income or gains that may need to be reported to HMRC. It should comfort you to know that we often find there is nothing to disclose, or there is no additional UK liability.

How many years do I need to disclose?

If we determine a disclosure is required, the number of years you need to disclose will depend on the behaviour that led to the non-disclosure, whether you have taken reasonable care, were careless or deliberately withheld the information. As a guide this can range from 4 to 20 years, so it is vital to have an adviser on your side to navigate the rules.

What about penalties?

Depending on the year the offshore income arose, and the behaviour that led to the error or failure to notify HMRC, penalties can be up to 200% of the tax due. This is where having a professional adviser is invaluable, as we will seek to mitigate the penalties to the lowest possible level. We have significant experience in handling these negotiations with HMRC.

What to do next?

If you have received a nudge letter and need help, please get in touch. We will manage the disclosure process for you and help take the stress out of dealing with HMRC.

We will work with you to draw a line under the matter, allowing you to feel confident in how to deal with your tax affairs in future.

Please contact us if you are unsure of whether you need to report sources of offshore income. Assessing your position will be straightforward and if there is a need to disclose to HMRC, it is better to come forward before a nudge letter is received.

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