LITRG Press release: LITRG welcomes HMRC approach on preventing offshore tax non-compliance

23 Mar 2021

The Low Incomes Tax Reform Group (LITRG) welcomes today’s publication of HMRC’s discussion document 'Helping taxpayers get offshore tax right'.

The document1 recognises that taxpayers who have not correctly reported their offshore income and gains to HMRC might not have done so deliberately, and for a host of different reasons. HMRC are looking specifically at how they can assist these taxpayers by intelligently using data provided under information exchange agreements and providing better guidance.

LITRG says that the document demonstrates a refreshing shift of focus from offshore tax compliance measures which have been introduced in recent years. For example, in 2017 the Requirement to Correct (RTC) was introduced, under which penalties of up to 200% of the unpaid tax can apply – regardless of whether or not the non-disclosure of the offshore income was deliberate.2 In 2019, the time limit for HMRC to assess UK tax on offshore income and gains was extended to 12 years, even in cases where a taxpayer has taken reasonable care.3

Kelly Sizer, LITRG Senior Technical Manager, said:

“Today’s discussion document appears to be targeted at taxpayers who make non-deliberate mistakes in reporting, or not reporting, their offshore income and gains. For this group, HMRC are interested in looking at “preventing non-compliance before it happens”, for example, by using prompts at various points in the tax compliance process. We support such an approach, and we hope that these changes will mean it is less likely for vulnerable and unrepresented taxpayers to fall foul of harsh compliance regimes designed with deliberate tax evaders in mind.

“In addition, HMRC appear open to suggestions on how they can improve guidance they provide to taxpayers in relation to their offshore tax obligations, as well as improving their public communications efforts. For unrepresented taxpayers, both points are critical. We look forward to providing HMRC with a considered response to this consultation.”


  2. A taxpayer who receives a ‘nudge letter’ from HMRC regarding their overseas income is likely to face penalties of at least 150% of the unpaid tax, regardless of whether or not the non-disclosure was deliberate. HMRC typically do not accept ignorance of the law as a reasonable excuse defence against these penalties, although the point has not yet been tested in the courts in the context of these penalties.

Low Incomes Tax Reform Group

The LITRG is an initiative of the Chartered Institute of Taxation (CIOT) to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.