According to City AM, HMRC continue to pursue non compliant UK taxpayers by issuing nudge letters. As previously covered, HMRC’s use of nudge letters is a cost efficient way of recouping tax for the Exchequer without the need to launch a tax investigation into a taxpayer’s past tax compliance. But beware, there are risks for both taxpayer and adviser alike.
For many taxpayers, a brown envelope from HMRC will not be well received at any time of the year. Odds on it will contain bad news. It may be the start of an investigation. It may be a “nudge letter” or a “Check on tax position”. It almost certainly won’t be a Christmas card!
HMRC use information received under the Common Reporting Standard to identify those ignoring the Loan Charge
HMRC are writing to taxpayers that have outstanding loans from their EBTs, EFRBs and other offshore structures. HMRC use information received under the Common Reporting Standard to identify those ignoring the Loan Charge. The origins of some of these arrangements go back to the 1990’s and have been “forgotten” – that is until now.
HMRC are pretty good at grabbing people’s attention by using such headings in their letters to taxpayers. Such letters are often effective because their “intelligence sources” are pretty accurate. I have seen letters in the past where HMRC have even quoted bank account numbers from the outset just to demonstrate how much detail they had at the time. All targeting offshore income and gains.
They say that a little knowledge can be dangerous. Likewise, being self taught off the internet can cause unexpected tax problems. A lot of taxpayers around the work want to be able to say “it’s tax free”.
So we have now had another chapter of the saga of secret bank accounts with the Pandora Papers. Just like their forerunners, it makes interesting reading – but so what. The “offshore world” exists because of demand – the demand for discretion and privacy. It’s no secret, it’s just none of your business!
The fact a taxpayer has an offshore bank account or an offshore trust or offshore anything can raise or add to the concerns of HMRC. Not so much as “what is there to hide” but more the fact that its not so transparent compared to being on the mainland UK.
This is the heading of the latest nudge letter from HMRC. Quite a snappy title and attracts most people’s attention to get them to read on further. But then how does HMRC know that you have any overseas assets? Or overseas income? Or overseas gains?
One of the symptoms of a tax investigation is the feeling that no matter what you do or say, you feel like you are drowning under the tax investigation. You need to treat the cause, not the symptom. You may need help to understand the cause but who do you turn to
In what sometimes I can only see as a bid to try and outmanoeuvre HMRC, a Trust can be moved around the world. Some might say that having travelled from Hong Kong in the East to Grand Cayman in the west that I have travelled a few miles on business. But why do Trusts seem to move a similar distance between say the Channel Islands, the Mediterranean and the Caribbean