We have started to receive letters from HMRC asking certain clients if they have “checked their UK tax affairs recently?” specifically referencing an offshore bank account with HSBC Jersey and stipulating that the enclosed ‘certificate of tax position’ is required by 31 December 2015. Failure to reply and submit the notification form may result in a ‘detailed investigation’ into your taxation affairs or at the very least a higher cost if you decide to come forward later under the new tougher disclosure facility being launched in April 2016.
Account holders are required to state whether they will:
- Declare tax irregularities by using HMRC’s current disclosure facility, such as the Liechtenstein Disclosure Facility
- Declare tax irregularities through making a voluntary disclosure outside of HMRC’s disclosure facilities
- Not declare any additional irregularities and state that their tax affairs do not need updating
Those who have no tax irregularities to declare must certify that they have no outstanding UK income tax, capital gains tax, inheritance tax, UK VAT and UK national insurance liabilities. No doubt HMRC will be keen to cross reference any certificates received with the new information made available to them on financial assets held abroad by UK-residents from over 90 countries that should start filtering through from next year.
HMRC suggests to seek tax advice before returning the certificate to them.
This is something of a scare tactic by HMRC. They show that they have information about the taxpayer to steer the taxpayer into some form of voluntary disclosure or a statement that all their tax affairs are up to date. It is interesting that details about a bank account should also prompt a statement about VAT and National Insurance. We can’t help but feel that the timing of these letters suggests that HMRC was keen to get one last warning on record before starting a new chapter in its determination to seek out those who have not paid the correct amount of tax.
It is something of a “catch 22”. If a taxpayer doesn’t reply it means that he or she is likely to be subject to an investigation, but if the taxpayer does reply they are going on record about matters that they do not normally declare in their tax returns.
Taxpayers who believe that their tax affairs are up to date should be cautious about how they respond and should seek advice as it is very easy to misinterpret or be unaware of changes in tax law and unknowingly there is tax due. Please contact the Tax Investigations Team at Mark Davies and Associates for more information.