HMRC’s New Tool to Uncover Unclaimed Offshore Income And Assets

HMRC are making efforts to establish citizens worldwide tax affairs – If you receive a letter we are advised, do not ignore it. Many might think that many letters like this are being widely sent out as a scaremongering tactic to convince more people to comply with tax legislation, but it is much more serious than that.

Certificates of Tax Position is part of a new project from HMRC to force disclosure of undeclared foreign income and gains. The letters that are being sent out, as part of this project, are from the Risk and Intelligence Service - a specialised team within HMRC’s Wealthy, Mid-Sized Business and Compliance Unit.

Those who receive this letter have been selected thanks to information shared on foreign bank accounts via the Common Reporting Standard (CRS). This is where HMRC are able to receive details of foreign bank accounts in over 100 jurisdictions across the world. It is important to note that most banks and financial institutions pride themselves in being CRS compliant.

If you have received this letter, it is important to respond within 30 days of when the letter is dated. By choosing to ignore the letter, you will incur unwanted further attention and investigation from HMRC, and it could seem as if you have something to hide. HMRC have provided three formal declarations for recipients to sign:

1. I need to bring my tax affairs up to date and will do so using the Worldwide Disclosure Facility
2. I do not have offshore income on which UK tax might be due
3. I have declared all of my offshore income which might be taxable in the UK. My tax affairs do not need updating and I do not have additional tax to pay

Whether or not you have tax irregularities, it is highly advisable to obtain advice and/or representation from an experienced tax investigation lawyer before responding. This is to ensure you are aware of and consider all the important issues and answer in the way that is best for you, and prevents any investigative challenge that HMRC may bring, in the belief that your case is suspicious and worth pursuing - or worse, higher penalties or criminal action.

ABC Note: Mark has specialised in tax disclosures, defending HMRC investigations and prosecutions for over 20 years. He is now a Partner of: Richard Nelson LLP.

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