There are many departments within HM Revenue & Customs (HMRC) including the Risk and Intelligence Service, Offshore. Some taxpayers and indeed some non taxpayers may have recently had a letter from this department suggesting that “we have information that shows they may have received overseas income and/or gains which is taxable in the UK”. Is this scaremongering by HMRC?
Where has HMRC got the information from?
By the exchange of information under the Common Reporting Standard (CRS) most likely. But HMRC will also listen to “well-wishers” – ex employees, ex spouses, neighbours in fact anyone who wants to talk to them.
HMRC will seek to test the information and prefer documentation, i.e. something that is tangible and demonstrates the alleged tax irregularity.
What exactly is the information that they have?
HMRC do not want to tell taxpayers that. It may be for a specific UK tax year or relate to a specific event that may lead to a UK tax liability. It may be just a “fishing exercise” not that HMRC will ever admit to doing that either.
Either way it can trigger a catalogue of events. Firstly, the recipient will invariably be worried. Secondly, it is almost human nature to start the “blame game”.
Whatever HMRC are referring to, the way the letters are written suggests that there is some alleged tax irregularity and you may owe tax.
When did this alleged tax irregularity happen?
HMRC will not tell you that either.
If the information has come under CRS reporting, then CRS is on a calendar year, not a UK tax year. As a result , HMRC doesn’t always know which tax year the information relates to.
What should taxpayers do?
Seek specialist advice.
It may be something or nothing. The legislation in the UK is complex and ever changing and is sometimes retrospective in its application. Or may be HMRC is just scaremongering?
I can be contacted at firstname.lastname@example.org or Andy at email@example.com.