International investigators

In an increasingly global world where individuals and businesses regularly cross both literal and metaphorical geographical boundaries, it was inevitable that eventually the taxman would sit up and take note.

Using offshore jurisdictions to shelter assets from tax has long been a mainstay of effective tax planning, particularly for globally mobile and high-net-worth individuals. However HMRC and other tax enforcement agencies have for a long time been concerned that this type of planning is open to abuse, and as a result an ongoing program of international information exchange has been developed.

As a result HMRC are now aware of the existence of assets owned by UK residents outside the UK. These assets can include property, bank accounts, bonds and shares. Such assets may of course produce neither taxable income nor gains, for example a holiday home owned in Spain for purely personal use. Nonetheless HMRC have started to write to individuals where they have information about an overseas asset asking them to confirm whether they wish to disclose any additional tax liabilities under the Worldwide Disclosure Facility (WDF).

Such letters should be approached with caution and professional advice sought before determining how to respond. Signing the enclosed certificate and making a false statement, even if inadvertent, can lead to criminal prosecution. A response by letter which allows for a fuller and more considered explanation is often the optimum route and one that we would recommend.

Following the news that HMRC has issued warning letters to people with overseas bank accounts and investments regarding possible under-declaration of their UK tax liabilities, national audit, tax, advisory and risk firm, Crowe UK has advised recipients that given there is no statutory requirement to do so, to avoid signing the formal certificates issued with the letters until specialist advice is sought.”