In Monday’s Telegraph Laura Miller explores the repercussions of returning a signed offshore income and gains letter to HMRC.
In this article Mark Davies explains that signing the disclosure might prevent a taxpayer from being able to claim an unprompted disclosure of a mistake, which would lead to higher penalties. He also warns that fully compliant people are being nudged in the same way as non-compliant people. HMRC is not strictly entitled to ask for such a declaration, but not complying could lead to a formal enquiry. Furthermore, HMRC is giving recipients of the offshore income and gains letters only a month to review their affairs which is too short.
Why are these letters landing on our doormats now?
The recent introduction of the Common Reporting Standard is seeing information on offshore income and gains earned by tax payers flowing between its member countries. Offshore income and gains might include interest in foreign bank accounts or rent from property owned abroad. Using this information, HMRC’s Risk and Intelligence Service is sending out tens of thousands of letters to tax payers asking them to certify their tax position even if no tax is owed.
Those in receipt of these letters should seek professional tax advice before signing and returning the letters as an incorrect submission could affect the amount of penalties charged if an inadvertent error is later discovered. A full disclosure may be necessary to reduce penalties.