Letter from HMRC about overseas income and gains.
The international automatic exchange information agreements put at HMRC’s disposal a large amount of information about the overseas assets and income of UK residents.
The information received from abroad and use of advanced data management allows HMRC to check the accuracy of UK tax returns whereas they identified apparent disparities.
As part of their campaign to tackle tax avoidance and evasion HMRC started sending the letters to UK residents accompanied by a Certificate of tax position which are to be completed and returned to them.
There is an option to either:
- Tick Box 1 and make a disclosure to HM Revenue and Customs (HMRC) – if you’ve got undeclared money or assets abroad or
- Tick Box 2, 3 or 4 depending upon which box is relevant to your situation – if you’ve already declared and paid any UK tax you owe or if there is no tax payable if it’s covered by personal allowance or reliefs.
UK tax resident individuals should typically consider UK tax on their worldwide income and gains (regardless of whether that income is already being automatically taxed in the country it originated – this is not always the correct tax position).
If there is an undeclared foreign income the disclosure needs to be made to HMRC.
On receipt of this letter, the recipient typically has around 30 days to reply whether they intend to disclose an additional tax liability. HMRC will then start the process of disclosure and issue a further letter, from which you will have 90 days to make a full disclosure via HMRC’s online worldwide disclosure facility
Depending on the source-country of the income or gains, whether this disclosure was voluntary or prompted, and your “behaviour” which led to this error, penalties will be applicable. These could be up to 200% of the tax payable – plus interest.
If you have received a letter form HMRC, get in touch with us on email@example.com or 02073539200 to discuss further steps. We will always give an honest appraisal including potential fees. Our team is ready to answer your questions giving you confidence when dealing with sensitive issues and provide assistance whether with completing the certificate of tax position or setting up worldwide disclosure facility and making full disclosure to HMRC.