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Foreign Income Nudge Letters

If you have overseas assets or income, you may receive a ‘nudge letter’ from HMRC asking questions to ensure that your tax affairs are in order.

HMRC exchange information with tax authorities in other counties and if they are notified that you have income or assets in any of these countries, they may issue a ‘nudge letter’ in the first instance rather than opening a formal tax enquiry.

There have been several changes to tax legislation in recent years regarding foreign income, so you may have previously been advised that this income is not taxable in the UK but that may no longer be the case. It is also possible that in order for this income not to be taxable in the UK, a Remittance Basis Charge (RBC) could apply – which we discussed in our previous article.

In addition to letters being sent to people with undisclosed foreign income, we have also seen them issued to people who have already correctly disclosed their foreign income in their Tax Returns and where this income is not taxable in the UK.

The tax treatment of foreign income can be complex, and it is important to obtain the correct advice from a knowledgeable advisor with experience in this particular area of tax. This is especially important as penalties for non-disclosure of foreign income can be very high. If you have received a ‘nudge letter’ from HMRC, we would strongly recommend seeking advice before responding to them if you have undisclosed foreign income in order to minimises the penalties that will be charged.

If you wish to discuss your own position, please contact our International Individuals Taxperts who are here to help.

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