FINANCE
BY ANGELO CHIRULLI , DIRECTOR OF TAX , AZETS , ORPINGTON
I received a “ nudge letter ” from HMRC : Do I need to panic ?
IF YOU OWN OVERSEAS ASSETS , OR IF YOU RECEIVED GAINS OR INCOME FROM ASSETS LOCATED ABROAD , YOU MAY HAVE RECEIVED THE SO-CALLED “ NUDGE LETTER ” FROM THE INLAND REVENUE ASKING FOR MORE INFORMATION . THESE LETTERS INVITE YOU , AS A TAXPAYER , TO CONSIDER WHETHER YOU HAVE ACCURATELY DECLARED OVERSEAS GAINS OR INCOME .
HMRC issues these letters to taxpayers when they receive information connecting the taxpayer to an overseas asset .
It is very important to underline the fact that if HMRC has sent a letter to you , it does not always mean that there is a tax liability to pay – you may already have properly declared all your offshore gain or income , or you are not liable to pay UK tax , or you may be covered by personal allowances . A review of past tax years could also uncover unclaimed tax relief ( for example on pension contributions ).
In every letter there will be a request to file a certificate of your tax position . There are two things they need to know . Firstly , they will want you to confirm that there is no disclosure to make and that all is in good order . Secondly , they want you to identify whether you need to make a relevant disclosure to HMRC .
If a disclosure is required , the certificate will allow you to confirm this and the subsequent disclosure will be made online via the Worldwide Disclosure Facility ( WDF ).
If you are based in the UK , you will need to report on the WDF :
1 . Income arising from a source outside the UK . 2 . Assets situated or held outside the UK .
3 . Activities carried on wholly or mainly outside the UK .
4 . Where the funds connected to unpaid tax are transferred outside the UK .
The disclosure must be made within 90 days from the date HMRC acknowledges your initial notification . The interest and penalties calculation will be based on existing legislation and HMRC aims to respond to disclosures within 55 days of submission . All disclosures will be referred to an investigating officer and deliberately false statements will be considered a criminal offence .
At the time of the disclosure , the taxpayer will be asked to self-assess their behaviour , the relevant penalties , and the number of years that disclosure will cover .
Every payment must be made at the submission time and a ‘ Time to Pay ’ may be agreed where appropriate .
Regarding the potential applicable penalties , the lowest rate of penalty applies for errors or failures to notify , which are made as the result of carelessness . A higher penalty applies for a deliberate error .
The WDF does not offer a taxpayer immunity from a criminal investigation and the taxpayer details may be published on the GOV . UK website .
When considering if you need to pay a penalty in connection with your disclosure , you have the right :
1 . To have the matter of penalties dealt with without unreasonable delay . 2 . Not to incriminate yourself . 3 . To seek help from a professional adviser .
For more information on nudge letters and the WDF , please contact a member of our Azets team or email taxmatters @ azets . co . uk / angelo . chirulli @ azets . co . uk .
Local offices : Ashford : 01233 629 255 / Canterbury : 01227 454 861 Maidstone : 01622 690 666 / Orpington : 01689 827 505 Sandwich : 01304 249 997
Accounting | Tax | Audit | Advisory | Technology www . azets . co . uk
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