In July 2020, a new batch of offshore 'nudge letters' issued by HMRC were sent out. The latest version of these letters confirms that HMRC has received information regarding the offshore assets held by the person through CRS automatic exchange and that this information has been compared to the person's tax returns, resulting in an apparent inconsistency. The letters include the 'certificate of tax position' which the recipient of the letter is asked to sign and return.
Since then HMRC have advised that a number of additional “nudge” letters may be issued to:
- individuals including those qualifying as a “Person of Significant Control” of mid-sized businesses;
- individuals where HMRC has received information from financial institutions that does not match to what is declared on the individual’s UK Self-Assessment (SA) tax return;
- individuals where HMRC has received information from employers relating to pay and benefits in kind and that information does not match information on the individual’s SA return;
- corporates which appear to have purchased a dwelling/residential property worth £500,000 or more from 1 April 2020 and have not filed an ATED return. The letter will state that HMRC is aware of the purchase and that a return must be filed. If the corporate believes they are not liable to ATED they will need to explain why; and
- individuals who may have sold a UK residential property and either not declared it or have made errors in their declarations.
On 6 November 2020, HMRC launched three more “nudge” campaigns:
- Deemed Domicile: an educational letter to those individuals who HMRC believe are deemed UK-dom.
- UK statutory residence test (SRT) campaign: an educational letter to check that the SRT has been properly applied. It also details the documents that should be retained.
- Outstanding SA Returns campaign: for those people who have received a notice to file for the year 2017/18 but have not yet done so.
Finally, on 20 November 2020 HMRC advised of the issue of three further “nudge” letters:
- Overseas Workday Relief: for those likely to claim this in 2019/20.
- Double Tax Relief: for those who claimed relief under a Double Tax Agreement in 2018/19.
- Foreign Tax Credit Relief: explaining the conditions and eligibility criteria for claiming Foreign Tax Credit Relief against employment income.
If you discover that corrections are required to earlier tax returns or you and/or your client have any undisclosed tax liabilities, please contact us for further advice.
Associate Director, Tax
KPMG Crown Dependencies