HMRC Has My Overseas Account Details from an Information Exchange: How Serious is This?

What Should I Do if HMRC Writes About My Overseas Accounts?

Start by checking the type of letter you have received, the information HMRC refers to and any response deadline.

An overseas account does not automatically create a UK tax liability. However, providing inaccurate or incomplete information before you understand your position may complicate the enquiry.

Identifying the type of letter you have received

HMRC sends different types of letters about overseas financial information.

• A nudge letter usually means HMRC has received information suggesting that your overseas income or assets may need reviewing. It invites you to check your tax returns and correct any errors.

• A formal compliance check means HMRC is examining your tax affairs under its statutory powers. It may request documents or explanations about particular accounts, transactions or tax years.

If the correspondence refers to suspected fraud, Code of Practice 9 or a criminal investigation, the position is more serious and requires specialist advice.

Check whether the letter comes from a compliance team or HMRC’s Fraud Investigation Service, and whether it cites a specific legal power.

Checking and meeting the response deadline

Nudge letters typically ask you to review your position and respond within 30 days. Missing this window may prompt HMRC to open a formal compliance check without further warning. 

HMRC’s published guidance indicates that if no response is received within 60 days of the letter, it may open a compliance check and potentially escalate the matter further.

Note the deadline immediately. It should not, however, cause you to send a response before legal advice is taken. 

A short, holding acknowledgement drafted by your solicitor is preferable to a substantive response made without advice. 

Any admission, explanation or partial disclosure made directly to HMRC before you understand your full position may be used against you in any subsequent tax evasion investigation.

Gathering documents before instructing a solicitor

Collecting the relevant records before your first meeting with a solicitor will make that meeting more productive and may preserve documents that would otherwise be difficult to retrieve later. 

You should gather overseas account statements for all years under review, copies of your UK self-assessment tax returns for those years, and any correspondence with the advisers who established or managed the overseas structures.

Written advice received at the time the structures were created or at the time relevant transactions took place is particularly important. 

Its content and scope will be central to any assessment of your exposure and to any defence you may rely on. The significance of that advice is explained in the section on historic professional advice below.

What Information Does HMRC Receive Under the Common Reporting Standard?

HMRC receives detailed financial account information automatically from more than 100 countries every year, without any request from you or your bank. 

This exchange happens regardless of whether you know about it and regardless of whether the financial institution has told you that your details have been reported. 

This automatic data sharing is a primary tool in identifying potential offshore tax evasion.

How the Common Reporting Standard works

The Common Reporting Standard (CRS) is an international framework for the automatic exchange of financial account information on a multilateral basis.

It was developed by the Organisation for Economic Co-operation and Development and implemented into UK law in 2015.

Financial institutions in participating jurisdictions, including banks, asset managers and certain insurance companies, report account holder details to their domestic tax authority each year. 

That authority then passes the information automatically to the tax authorities of the account holder’s country of tax residence. 

The information reported includes account balances, interest credited, dividends paid and gross sale or redemption proceeds from financial assets.

Banks, investment providers and some insurance businesses are covered by these reporting arrangements.

HMRC compares the information with tax returns and other records to identify possible discrepancies.

For example, an overseas account reporting substantial interest income may prompt HMRC to check whether that interest was included in your UK return.

However, CRS data is not itself proof that the income was taxable or undeclared.

The scope of reporting is broad and expanding

International reporting extends beyond ordinary savings accounts.

Investment accounts, custodial arrangements and certain insurance products may also fall within the CRS rules.

Separate international reporting requirements are being introduced for cryptoassets through the Crypto-Asset Reporting Framework.

UK cryptoasset reporting obligations apply to relevant activity from 2026, with the first reporting process taking place in 2027 under HMRC’s implementation timetable.

The rules are continuing to develop, so it is important to check which reporting requirements apply to the particular asset and period.

You should not assume that an overseas account or investment is outside HMRC’s reach simply because it is held in another jurisdiction.

Does an Overseas Account or Transfer Mean I Owe UK Tax?

Not necessarily. Holding money overseas does not automatically create a UK tax liability.

The tax treatment depends on your residence status, the source and nature of the funds and the rules that applied when the income arose or the transaction took place.

Tax residence and the Statutory Residence Test

Your liability to UK tax on overseas income and gains depends primarily on whether you were UK tax resident in the year the income arose or the gain accrued. 

Tax residence is determined year by year under the Statutory Residence Test (SRT), which was introduced for tax years from 2013 to 2014 onwards by Schedule 45 of the Finance Act 2013.

For years before the SRT applied, different common law and statutory rules determined residence and their application must be assessed separately. 

Where you arrived in or departed from the UK part-way through a tax year, split-year treatment may apply, with different consequences depending on the specific case. 

Each year must be analysed individually against the rules applicable to that year before any conclusion about UK tax liability or tax evasion exposure can be drawn.

What account data does and does not show

A reported account balance may reflect accumulated capital that predates your UK residence, funds that have already been declared on UK tax returns, or amounts that represent capital rather than income. 

A transfer into or out of an overseas account may be a capital movement, a loan repayment, an intercompany transaction or a distribution from a trust or company structure that has its own tax analysis under UK law.

The existence of an overseas account, and the figures reported under CRS, does not by itself establish that UK tax is due or that tax evasion has occurred. 

Each item that HMRC has identified requires separate examination against the applicable tax rules for the year in which it arose before any reliable view of liability can be formed. 

This analysis must be carried out before any disclosure is made.

Non-domicile status and the remittance basis

For tax years before 6 April 2025, some UK-resident non-domiciled individuals could use the remittance basis when calculating UK tax on foreign income and gains.

Where the conditions were satisfied, certain overseas income and gains were generally taxed when brought to or used in the UK rather than when they arose.

Whether this treatment applied depends on the rules for the relevant year and any claims made.

The remittance basis was abolished from 6 April 2025.

It was replaced by a four-year foreign income and gains regime for qualifying new UK residents who meet the applicable conditions, including a preceding period of at least ten consecutive tax years of non-UK residence.

Eligible individuals can claim relief on qualifying foreign income and gains during their first four years of UK residence.

If HMRC is examining years before and after April 2025, the different regimes must be considered separately.

Can I Use the Worldwide Disclosure Facility After HMRC Contacts Me?

Yes, potentially. HMRC’s Worldwide Disclosure Facility allows taxpayers to disclose UK tax liabilities connected with overseas income, gains or assets.

Receiving an HMRC letter does not automatically prevent you from using it.

However, the type of investigation already underway and the circumstances of your disclosure may affect the appropriate procedure and penalties.

What the Worldwide Disclosure Facility is

The Worldwide Disclosure Facility allows individuals and businesses to report previously undeclared UK tax liabilities involving offshore matters.

You first notify HMRC that you intend to make a disclosure through its Digital Disclosure Service.

After receiving acknowledgement and a disclosure reference number, you generally have 90 days to prepare and submit the disclosure.

The information must include the relevant tax liabilities, interest and penalties.

HMRC expects payment when the disclosure is submitted, unless suitable arrangements have been agreed.

If you cannot pay immediately, you should raise this before submitting the final disclosure.

Prompted versus unprompted disclosure

Whether your disclosure is prompted or unprompted can affect the minimum penalty.

An unprompted disclosure is generally made before you have reason to believe HMRC has discovered, or is about to discover, the relevant irregularity.

If HMRC has already contacted you about the same offshore matter, the disclosure may be treated as prompted.

However, the classification depends on the circumstances. Receiving a general nudge letter does not automatically settle the legal question in every case.

For example, an HMRC letter referring to a specific overseas account may be relevant when assessing whether you had reason to believe the irregularity was about to be discovered.

Prompted disclosures usually attract higher minimum penalties, although cooperation can still affect the final amount.

Eligibility and limits of the facility

The Worldwide Disclosure Facility may remain available even if HMRC has already written to you about overseas assets.

HMRC’s guidance specifically addresses taxpayers who receive such letters and discover that a disclosure is needed.

However, an existing formal investigation, a COP9 offer or criminal proceedings may mean that a different response is more appropriate.

You should establish which process applies before notifying HMRC of your intention to disclose.

The facility does not provide immunity from prosecution, and making a disclosure does not guarantee that HMRC will accept your calculations or proposed settlement.

Does Making a Disclosure Protect Me From Prosecution?

No. Making a disclosure through the Worldwide Disclosure Facility does not provide immunity from criminal prosecution for tax evasion and does not guarantee that HMRC will not investigate or prosecute the conduct disclosed.

HMRC’s retained discretion to prosecute

HMRC retains discretion to pursue a criminal investigation and prosecution for tax evasion even where a disclosure has been made. 

The existence of the WDF does not bind HMRC’s Fraud Investigation Service, and HMRC’s published policy states that it will use criminal investigation in cases of serious fraud, regardless of whether a disclosure facility exists. 

A disclosure does not constitute an agreement with HMRC about how the matter will be treated.

HMRC’s Fraud Investigation Service handles cases where there is reason to suspect criminal conduct, including deliberate tax evasion. 

If a case is referred to the Fraud Investigation Service before or after a disclosure is made, the decision about whether to pursue a criminal or civil route lies with HMRC and ultimately with the Crown Prosecution Service, not with the person who has disclosed.

What voluntary disclosure can achieve

A timely, complete and accurate disclosure made in good faith is relevant to how HMRC exercises its discretion.

HMRC’s published prosecution policy states that it considers factors including whether the person has made a full and voluntary disclosure when deciding whether criminal investigation and prosecution for tax evasion is in the public interest. 

Early, cooperative engagement with specialist legal advice is itself a relevant factor.

Voluntary disclosure may also reduce the civil penalties imposed, as explained in the penalties section below. These are meaningful practical benefits.

When criminal investigation is more likely

HMRC is more likely to pursue a criminal tax evasion investigation where the non-compliance appears deliberate and concealed, where the amounts involved are substantial.

The nature of the original omission is a central question in any investigation and directly affects both the penalty regime and the criminal exposure.

Can Historic Professional Advice Help My Defence?

Yes. Advice received from an accountant, solicitor or overseas tax adviser may help explain why you believed your arrangements were lawful.

However, its relevance depends on what the adviser was told, what advice was given and whether it covered the particular tax years and transactions HMRC is examining.

Why the content and scope of the advice matters

An adviser may have confirmed that an overseas company or trust was legally established without addressing every UK tax obligation arising from it.

Advice given when an account was opened may also have become outdated following changes in legislation or your residence status.

HMRC may therefore examine whether the advice covered the specific income or transaction now in question.

For example, written advice about an overseas investment made before you became UK resident may not explain how later investment income should have been reported.

Keep the original advice, supporting correspondence and any information you provided to the adviser.

These records may help establish what you reasonably understood at the time.

The difference between a reasonable excuse and a criminal defence

In civil penalty proceedings, reliance on professional advice may be relevant to whether you took reasonable care or had a reasonable excuse for a particular failure.

The legal test depends on the type of penalty involved.

Simply having an accountant does not automatically remove your responsibility for accurate tax reporting.

In criminal proceedings, professional advice may be relevant to whether you acted dishonestly or knowingly evaded tax.

If you accurately explained your circumstances and genuinely relied on appropriate advice, that may help establish your state of mind.

However, reliance on an adviser is not a general defence to every allegation of tax evasion.

Coordinating advice across jurisdictions

If your overseas arrangements involve companies, trusts or assets in more than one country, you may need advice from professionals familiar with the relevant jurisdictions.

The treatment of an arrangement under overseas law may differ from its treatment for UK tax purposes.

For example, a company may be legally established abroad while its income or distributions still create UK reporting obligations.

Your UK solicitor should be given copies of relevant overseas advice and details of the advisers involved.

This can help identify which issues have already been considered and where further advice is needed.

What Are the Civil Penalties and Criminal Sentences for Offshore Tax Evasion?

The consequences depend on the amount of unpaid tax, how the irregularity arose, the tax years involved and whether HMRC treats the matter as civil or criminal.

Different penalty rules may apply to offshore inaccuracies, failures to notify liability and historic failures to correct offshore non-compliance.

Tax and interest

If overseas income or gains should have been declared, HMRC may seek the outstanding tax together with late-payment interest. The period HMRC can assess depends on the circumstances.

The usual assessment limits include four years for ordinary cases and six years where the tax loss resulted from carelessness. For certain offshore income tax, capital gains tax and inheritance tax matters, an extended twelve-year assessment period may apply.

This can apply even where the taxpayer was not careless, subject to statutory exceptions and transitional rules. A twenty-year period may apply where the loss  resulted from deliberate conduct or certain failures to notify.

Each tax year and the relevant assessment rules must therefore be considered separately.

Civil penalties for offshore inaccuracies

Civil penalties are generally calculated as a percentage of the tax lost. The amount depends on the behaviour involved, whether disclosure was prompted and the category of the overseas territory under the applicable rules.

For example, careless inaccuracies may attract lower penalties than deliberate and concealed inaccuracies.

For relevant offshore inaccuracies, penalties can reach 100% of the lost tax for category 1 territories, 150% for category 2 territories and 200% for category 3 territories.

The applicable category and minimum penalty also depend on the tax year. HMRC may reduce penalties based on the quality of disclosure, including the information and assistance provided.

However, the applicable rules must be checked rather than assuming that a particular territory automatically falls into the highest penalty category.

The Requirement to Correct and Failure to Correct penalties

The Requirement to Correct regime required taxpayers to correct certain historic offshore tax irregularities by 30 September 2018. If the relevant liabilities were not corrected by that deadline, Failure to Correct penalties may apply.

The standard penalty is 200% of the tax involved. This may be reduced to a minimum of 100% for a voluntary correction or 150% where the correction is non-voluntary, subject to the applicable rules.

Additional penalties may arise in certain circumstances, including where substantial offshore assets or deliberate asset movements are involved. The regime does not automatically apply to every overseas account or every historic tax year.

Its relevance depends on whether the particular liability fell within the original Requirement to Correct rules.

Criminal sentences for tax evasion

Where HMRC pursues criminal proceedings, the potential sentence depends on the offence charged. Fraudulent evasion of income tax carries a maximum sentence of fourteen years‘ imprisonment for offences committed on or after 22 February 2024.

The previous maximum was seven years.

The common law offence of cheating the public revenue carries a maximum sentence of life imprisonment. Other offences, including fraud or money laundering, may also be relevant depending on the circumstances.

Courts consider the amount involved, duration of the offending, degree of planning, concealment and the defendant’s role.

A criminal investigation does not mean that conviction or imprisonment is inevitable. The prosecution must prove the offence beyond reasonable doubt.

What if I Cannot Pay What Is Owed?

If you discover that you owe UK tax on overseas income or gains but cannot pay the full amount immediately, you should still establish the correct liability and consider your disclosure obligations.

HMRC may agree a Time to Pay arrangement in suitable circumstances. This allows a debt to be paid in instalments based on your financial position and what HMRC considers affordable.

However, interest may continue to accrue during the arrangement.

If your assets are held overseas or cannot readily be converted into cash, you may need advice about their value and availability.

Where you intend to use the Worldwide Disclosure Facility, discuss any proposed payment arrangement with HMRC before submitting the completed disclosure.

Financial difficulty does not remove the obligation to provide accurate information, but it may affect how the outstanding debt can be managed.

How a Solicitor Can Help at This Stage

If HMRC has contacted you about overseas financial information, a solicitor can review the letter and explain whether you are facing a nudge enquiry, formal compliance check or suspected tax fraud investigation.

They can also advise whether a disclosure is necessary, whether the Worldwide Disclosure Facility is appropriate and what records should be gathered before responding.

Where the matter involves historic overseas arrangements, a solicitor can work with UK and foreign tax advisers to establish the applicable rules and assess the significance of any advice you previously received.

If HMRC is considering criminal proceedings, a criminal defence solicitor can advise on the allegations, your rights and how to respond to investigators.

Ashmans Solicitors advises individuals and businesses facing HMRC investigations and tax evasion allegations.

If you have received a letter about overseas accounts or international financial information, our fraud and financial crime team can assess your position and explain the available options.