Certificate of Tax Position – Nudge Letters

Certificate of Tax Position

In recent months, HMRC has issued ‘nudge letters’ to UK individuals with potential tax liabilities on overseas income and gains.

Following the receipt of financial information under the Common Reporting Standard (CRS), HMRC has issued letters to these individuals stating that information now in HMRC’s possession indicates that they may have received foreign income and/or gains which could be taxable in the UK.

“We have information which shows that you may have received overseas income or gains which is taxable in the UK,” the letters say. “We have received this information through the UK’s tax information exchange agreements with other countries. It is your responsibility to tell us about your UK tax liabilities from offshore income or gains anywhere in the world.”

Attached to the letters is a ‘Certificate of Tax Position’. This instructs individuals to sign a statement that either their tax affairs need to be brought up to date through the Worldwide Disclosure Facility (WDF), or they have declared all their income and gains.

The Worldwide Disclosure Facility (WDF) allows those with undisclosed offshore money, gains, investments or assets to settle and regularise their tax affairs with HMRC, but unlike other voluntary disclosure arrangements, will offer no favourable terms or lower penalties.

INDIA

Between August 2020 and December 2020, HMRC issued “nudge letters” to UK residents with potential tax liabilities on overseas income or gains, prompting them to make a disclosure under the Worldwide Disclosure Facility (WDF).

This latest batch of letters specifically targets UK residents with a financial connection to India, such as those that hold a high-yield rupee fixed deposit account or a NRI/NRO/NRE accounts. In most cases, UK residents are subject to UK taxation on their worldwide assets, including overseas bank interest.

Attached to the letters is a ‘Certificate of Tax Position’. This instructs individuals to sign a statement stating that either their tax affairs need to be brought up to date through the Worldwide Disclosure Facility (WDF), or they have correctly declared all their worldwide income and gains. the consequence of making an incorrect Certificate of Tax Position declaration could be severe.

Common Reporting Standard

The Common Reporting Standard (CRS) is an international agreement involving the UK and over 100 countries including countries in the European Union, China, India, Hong Kong and Russia. It allows for the exchange of information between jurisdictions about financial accounts and investments to help stop tax evasion.

Overseas financial institutions, for example, banks, insurance companies, investment companies, will provide information on UK residents with financial accounts and investments outside the UK which will be passed to HMRC.

OUR EXPERIENCE

Jeffreys Henry LLP has significant experience in dealing with HMRC investigations and disclosures, including the current WDF (opened on 5 September 2016) and previous the Liechtenstein Disclosure Facility (closed in 31 December 2015).

Over 100 years of combined experience dealing with Inland Revenue/HMRC tax investigations
Manage the full process on your behalf or advise you on the best strategy to approach
Minimise potential penalties and interest
Negotiate affordable repayment terms
Cost effective, fixed and capped fee arrangements
A Top 60 UK accountancy firm (ranked by UK fee income)
ICAEW regulated firm of Chartered Accountants
Hindi, Punjabi and Gujarati speaking tax advisers

INTRODUCTORY MEETING

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IAN LEIGH

Tax Partner

Ian is a Chartered Accountant who has specialised in tax since 1985. Ian advises owner managed businesses, public companies, private clients and trusts on the broad range of taxes and has extensive experience of international tax, domicile and residence issues. Ian also has significant experience in dealing with HMRC tax investigations and disputes including Section 9A enquires, the Worldwide Disclosure Facility Code of Practice 9 and the Contractual Disclosure Facility.

ANDREW LEWIS

Tax Manager

Andrew manages the firms personal tax department, including a portfolio of personal tax clients such as High Net Worth Individuals, Self Employed, Directors, Landlords, Non-Residents and Partnerships. Andrew also has significant experience in dealing with HMRC tax investigations and disputes including Section 9A enquires, the Worldwide Disclosure Facility (WDF), Code of Practice 9 and the Contractual Disclosure Facility.

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