HMRC has written about my offshore income, what do I do?

A letter about offshore income typically means HMRC has received account data from a bank, investment platform or other financial institution overseas, and its systems have not matched that data to anything on your UK tax return. This does not automatically mean tax is owed, since some overseas income is properly non-taxable or already reported, but it does need checking carefully.

The letter is often part of a One to Many campaign, sent to a group of people identified through the same data source, rather than a bespoke investigation into you specifically at this stage.

Under the Common Reporting Standard, financial institutions in participating countries report account holder information to their local tax authority, which then shares it with HMRC where the account holder is UK tax resident. This covers interest, dividends, and account balances, and increasingly reaches accounts that were once effectively invisible to HMRC.

If tax is owed, the correct disclosure route is the Worldwide Disclosure Facility, which applies offshore-specific rules under Schedule 24 Finance Act 2007. Offshore matters can attract a higher penalty percentage than equivalent onshore errors, reflecting extra reporting obligations attached to overseas assets, and time limits under the Taxes Management Act 1970 can extend further back for offshore matters than for purely domestic ones.

Because you received a specific letter naming this issue, any disclosure you now make is likely to be treated as prompted rather than unprompted, which sits in a higher part of the penalty range. Acting promptly still keeps costs and risk lower than ignoring the letter.

Offshore income held personally, such as overseas savings interest or rental property, is reported through your own Self Assessment return, separate from your company's affairs.

If your company itself has overseas transactions or a subsidiary, that is a different matter requiring separate corporation tax advice rather than the Worldwide Disclosure Facility, which applies to individuals.

You will owe any underpaid tax, interest, and a penalty within the offshore-adjusted Schedule 24 range, reflecting that the disclosure is likely prompted given HMRC's letter named the issue specifically.

Offshore matters are often more complex to unpick across multiple jurisdictions and currencies, so specialist review is usually worthwhile. If the matter escalates into a formal enquiry, tax investigation insurance included with our Growth plans can cover representation costs — see /fees.

Do not ignore the letter on the assumption the account is small or historic. Common Reporting Standard reporting generally applies without a de minimis exemption for most account types.

Avoid using a domestic disclosure route for an offshore matter. The Worldwide Disclosure Facility applies specific offshore rules that a general disclosure does not capture correctly.

Do not delay once you have confirmed tax is owed. Further delay after receiving a specific letter increases the risk of HMRC opening a formal Code of Practice 8 or Code of Practice 9 enquiry.