HMRC issues new wave of offshore “nudge” letters

HMRC has issued a further round of “nudge” letters targeting individuals it believes may have undeclared offshore income or gains. The letters form part of HMRC’s ongoing use of data from international information exchange agreements. What should you do if you receive one?

HMRC issues new wave of offshore “nudge” letters

The letters are sent where HMRC’s data suggests that overseas income or assets may not have been fully disclosed. This information is typically obtained through agreements such as the Common Reporting Standard, under which financial institutions report details of accounts held by UK taxpayers. Recipients are asked to review their tax affairs and confirm whether all offshore income and gains have been correctly reported. In some cases, the letters invite taxpayers to make a disclosure using HMRC’s offshore disclosure facilities.

While the letters do not themselves create a formal enquiry, they are a clear indication that HMRC is monitoring offshore activity closely. Ignoring a nudge letter can increase the risk of a full compliance check, which may result in penalties if errors are identified. If you receive a letter, you should review your position promptly and take advice where necessary. Early disclosure of any errors can reduce potential penalties and help avoid escalation.

Institute of Chartered Accountants in England and Wales