Insights

If you have overseas assets, or you receive income or gains from overseas assets, you may have received a letter from HMRC asking for further information. These letters are called  ‘nudge letters’ by HMRC and they serve as a prompt for taxpayers to consider whether they are properly declaring overseas income or gains in the UK.

Nudge letters are issued when HMRC becomes aware that you might have non-UK assets, for example you might have savings in an overseas account. Be mindful that this alone does not mean you owe any tax; the letter is simply a nudge to you to consider whether you need to take action. It may be that you have already made full disclosure of the income or gains on your UK tax return, or that you are non UK resident and have no obligation to do so.

A nudge letter will ask you to complete a certificate of your tax position and it is advisable when completing this to also send a letter explaining the position.

There are two main responses available on the certificate:

• An identification of a need to make disclosure to HMRC; or
• Confirmation that everything is in order and there is no disclosure to make.

Disclosures are typically made online through HMRC’s Worldwide Disclosure Facility (WDF). However, if you receive a letter and realise you need to make a disclosure, it is advisable to contact HMRC separately to start the disclosure process.

If you do discover a tax shortfall, the sooner you make a full disclosure to HMRC the better as this will minimise any penalties you may need to pay. In very serious cases of fraud, continued delays may result in criminal proceedings. It may be the case that a disclosure through the WDF is not appropriate to your circumstances, in which case the options on the certificate may not be appropriate.

When completing the certificate bear in mind that errors or deliberately false statements will be treated as a criminal offence. If this is discovered by HMRC in the future, you may be subject to an investigation and prosecution.

If you have received a nudge letter from HMRC and are unsure how to complete the certificate, please take professional advice first. You can get in touch via partners@rjp.co.uk