Danielle Ford, Partner and Head of Tax Disputes, and Riocard Hoye, Senior Manager, have contributed to WealthBriefing on the increased efforts by HMRC to clamp down on offshore tax non-compliance.

Nudge letters targeting offshore affairs

HMRC’s recurring nudge letter campaign targets individuals with offshore interests with a letter titled ‘your overseas assets, income or gains’. Nudge letters are a cost-effective strategy for HMRC to prompt a large number of taxpayers to correct any discrepancies in their tax affairs.

With HMRC’s access to a wealth of data under the Common Reporting Standard (CRS), the risk of penalties for tax irregularities has significantly increased. In the tax year 2022/23, HMRC’s upstream operational yield, which includes nudge campaigns, contributed £5.3 billion in revenue, indicating the success of the nudge letter approach.

What to do if you receive a nudge letter

Taxpayers are urged to take nudge letters seriously, as they are targeted and informed by detailed information suggesting offshore income or gains unreported in UK tax filings. Responding within the stipulated 30-day deadline is advisable, and seeking professional advice is the first course of action, particularly for disclosures that require detailed knowledge of HMRC’s complex penalty regimes. Proactive disclosure of errors or omissions before receiving a nudge letter can significantly reduce potential penalties, with some starting as low as 0%.

You can read the article in full via WealthBriefing here.

Our tax disputes service

Our Tax Disputes & Resolutions team are experts with HMRC’s nudge letter approach and can provide advice on your next steps to help mitigate your tax exposure. Contact Danielle or Riocard to discuss your needs in more detail.