HMRC nudge letters guidance

HMRC nudge letters guidance

Hayley Ives, Senior Manager, Tax Resolutions
19/07/2019
HMRC nudge letters guidance

The Chartered Institute of Tax (CIOT) has recently issued an update to its members, advising best practice when their clients receive so called ‘certificates of tax position’ from HMRC relating to offshore income, gains and assets.  

The guidance is welcome given the far reaching impact these letters have already had, and will undoubtedly continue to have. Most intermediaries with UK clients will be asked by concerned clients what they need to do upon receiving HMRC’s letter and certificate of tax position.

What action should you take?

Our advice mirrors the CIOT’s guidance and can be summarised as follows:

  1. The client needs to check their position and satisfy themselves that, to the best of their knowledge and belief, their tax affairs are in order. The tax rules in relation to offshore income and gains are complex and so further exploration might be required.
  2. If there is nothing to correct, a response can be sent to HMRC. We strongly recommend the certificate of tax position is not completed. The only available option to tick states: “I have declared all of my offshore income, assets and gains which are taxable in the UK”. The UK tax return does not require asset declarations to be made, so the wording is flawed and does not include safeguards such as a defined period of time to which it relates. The certificate is not statutory so there is no requirement to complete it. Therefore, an appropriately worded letter can be sent in its place.
  3. If there is an issue to resolve, careful consideration of the client’s situation needs to be made to establish the best disclosure method.  

The rules surrounding disclosures of offshore income and gains as well as penalty considerations are ever more complicated given the Requirement to Correct legislation. The CIOT guidance prompts members to comply with the fundamental principles of professional competence and due care as set out in Professional Conduct in Relation to Taxation (PCRT). 

How we can help

Advisers are reminded not to undertake professional work they are not competent to perform, unless they obtain appropriate assistance from a suitably qualified specialist. Advice from another adviser specialising in tax disputes may therefore be needed if the agent does not have the necessary expertise to handle a disclosure themselves.  

Contact us

Sean Wakeman
Sean Wakeman
Partner, Head of Tax Resolutions
London
John Cassidy
John Cassidy
Partner, Tax Resolutions
London