Offshore Disclosures

HMRC’s 2019 "No Safe Havens" policy summarises their approach to offshore tax compliance, confirming their success in raising new sources of tax revenue from taxpayers overseas income and gains. Penalties are deliberately punitive, including potential for criminal prosecution. We've also summarised this policy in a blog, that you can read here.

Their success has largely been made possible via access to unprecedented levels of overseas financial information from over 110 global jurisdictions, who have agreed to exchange data under the Common Reporting Standard and other Automatic Exchanges of Information agreements.

HMRC are now using this information to directly target individuals where they believe such offshore income or gains have not been correctly reported. They have already issued letters to thousands of taxpayers and we expect this activity to increase.

Statistics suggest that around one in ten people resident in the UK have an offshore financial interest, but the taxation of such overseas sources can be particularly complex, with fundamental principles very often misunderstood. Some common misconceptions include:

  • Offshore Assets do not need to be reported - FALSE*
  • I have already paid overseas tax on foreign sources, so no requirement to declare foreign sources to HMRC - FALSE*
  • I was born overseas so I do not need to declare foreign assets - FALSE*
  • Foreign Rental income does not need to be declared - FALSE*
  • Foreign Pensions can be ignored - FALSE*
  • I can pick and choose the best Foreign Exchange Rate - FALSE
  • Income accumulated before moving to the UK is tax free - FALSE*

In addition to UK domestic tax complexities, the Tax Treaties in place with these same overseas jurisdictions must also be checked to determine taxing rights and elimination of any double taxation.

The above points can inevitably lead individuals to face a daunting combination of complex UK tax legislation, Overseas Country Treaty aspects and in many cases a somewhat threatening letter from HMRC who are in possession of "Big Brother" like information. This can be incredibly stressful and indeed frightening for those who are targeted by HMRC.

We have the essential specialist knowledge and expertise to be able to offer you clarity and support around any overseas tax matters. We can help step in on your behalf, liaising directly with HMRC to:

  • Correctly determine the historic/current tax position connected to overseas income or assets held
  • If necessary, formulate a strategic plan to correctly report to HMRC on your behalf, using their online Offshore Disclosure Facility
  • Negotiate penalties and interest charges

We would also proactively ensure that all tax planning opportunities are explored in terms of identifying tax mitigation opportunities relative to current or future overseas sources.

*Residence requires full declaration of worldwide income and gains, not just UK sourced. This might not always apply to Non UK Domiciled, UK Resident individuals in which case the matter will be far more complex.

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