Offshore Assets and Foreign Income


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No matter where your money and assets are, if you are UK resident and domiciled you must pay UK tax on all your income and gains worldwide. There may be some differences if you are not UK domiciled, but the rules are complex and frequently change.

HMRC recognises that there is often a link between holding offshore assets and failing to declare UK tax. It therefore considers all those that hold assets abroad to be ‘high risk’. HMRC is addressing this risk systematically, which includes issuing a large volume of letters to taxpayers where HMRC have received information about offshore assets. We can advise how best to approach these letters and assist with any response required on your behalf.

Disclosing offshore assets and foreign income

If you have any overseas income or capital gains that were overlooked on your UK tax returns, you should proactively seek to disclose these to HMRC. Read our latest article on how to use the Worldwide Disclosure Facility to do this. If you wait until HMRC begins an investigation, the eventual settlement cost will be higher.

"I reached out to BDO after being stuck in a personal tax investigation that made little progress over a number of years. HMRC had become entrenched in their view that I had remained UK tax resident when I hadn’t, and were seeking to assess me for a significant amount of further tax and interest, as well penalties. The BDO team set about demonstrating to HMRC that despite limited evidence showing I was outside the UK when I said I was, that was the truth. The team used their vast knowledge of the relevant technical areas to persuade HMRC that I was indeed non-UK resident. I would describe BDO’s approach as pragmatic; honest and effective. Mr S"

Common Reporting Standard

The OECD developed a Common Reporting Standard (CRS) for the automatic global exchange of financial information. Since September 2018 over 100 countries (including former ‘tax havens’) exchange information annually.

The CRS ‘looks through’ any trusts, companies and foundations to identify the individuals who have an interest. The information will then be given to the country where those individuals are believed to be tax resident.  HMRC obtains additional information from many countries using its network of Tax Information Exchange Agreements.

HMRC analyses the data it receives, comparing it to tax returns and other information it already holds, to identify taxpayers to investigate.

View our interactive map to get a wider picture of global adoption of the CRS.

Requirement to Correct

HMRC introduced the ‘Requirement to Correct’, which obliged taxpayers to disclose irregularities relating to offshore assets and foreign income before 30 September 2018.  Failure to fully disclose will result in penalties of at least 100% of the tax in the absence of a ‘reasonable excuse’.

HMRC are reaching out to taxpayers who may have needed to disclose this information and failed to do so. Asset based penalties and public naming may also occur if a person knew they should correct and did not. Disclosures can still be made now and should result in lower penalties than those which HMRC will impose if it starts an investigation first.

Have you received a letter referencing the RTC? Please get in touch for confidential, ‘no obligation’ advice

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