Overseas income, investments and changes in tax residence can create complex UK reporting obligations. For expatriates and individuals moving to or from the UK, a review may identify income or gains that should have been reported, or a residence position that requires correction.

Where an omission is identified, the priority is to establish the correct tax treatment and determine the appropriate way to bring matters up to date. HMRC's Worldwide Disclosure Facility provides a route for reporting UK tax liabilities connected wholly or partly with offshore matters. It is available to qualifying individuals living outside the UK as well as UK residents.

Whether you have received correspondence from HMRC or have independently identified a potential issue, we recommend obtaining advice before submitting a disclosure or confirming that your affairs are correct.

Why HMRC may contact you about overseas assets

HMRC receives financial account information through international information-exchange arrangements, including the Common Reporting Standard. Depending on the account and reporting requirements, this information can include account balances, interest, dividends and investment proceeds. HMRC uses overseas information to identify potential discrepancies in taxpayers' affairs.

HMRC may issue a targeted letter inviting recipients to review a particular aspect of their tax position. Often referred to as "nudge letters", these form part of its wider "one-to-many" compliance approach. Such correspondence does not necessarily mean that a formal enquiry has been opened or that additional tax is due.

Our recommendation is to review the letter alongside your returns and supporting records before responding. The review should establish whether there is an omission, whether the information requires explanation and whether any corrective action is necessary.

For further guidance, read our article: From Nudge to Enquiry: How to Respond to HMRC Correctly.

What is the Worldwide Disclosure Facility?

The Worldwide Disclosure Facility, commonly known as the WDF, allows taxpayers to disclose UK tax liabilities relating wholly or partly to offshore issues. These can involve overseas income, assets or activities, or certain transfers of funds outside the UK. Where the facility is used, any other previously undisclosed UK tax liabilities must also be addressed.

The process generally involves two stages:

Notification: Register an intention to disclose through HMRC's Digital Disclosure Service.
Disclosure and payment: Prepare the calculations, explain the relevant circumstances, assess penalties and submit the disclosure within the applicable deadline.

The usual disclosure deadline is 90 days after HMRC's notification acknowledgement. Payment should also be made within the required period, unless an arrangement has been agreed. Additional time may be requested for complex cases, but should not be assumed.

The WDF is not a tax amnesty. Interest and penalties are calculated under the applicable legislation, and using the facility does not guarantee immunity from criminal prosecution. HMRC may examine the completeness of the disclosure and challenge the taxpayer's assessment of their behaviour.

Establishing whether a correction is required

Our starting point is a review of the underlying tax position, rather than an assumption that an overseas account or asset necessarily creates an undeclared liability.

Depending on your circumstances, we may review:

your UK residence history and previous tax returns;
interest and dividends from overseas accounts;
overseas rental income and property disposals;
investment portfolios and gains;
foreign pensions, life policies and investment bonds;
UK rental income received while living abroad; and
advice previously obtained and the reporting treatment adopted.

We would use this information to establish the position for each relevant year, identify any available reliefs and quantify any additional liability.

Where a correction is required, we would also assess the most appropriate route. The WDF is intended for offshore-related liabilities; other disclosure routes, including HMRC's Let Property Campaign, may be relevant in different circumstances.

How offshore penalties are assessed

The penalty position requires separate consideration from the tax calculation. Offshore penalties can depend on the type of failure, the behaviour involved, the relevant territory and the timing and quality of the disclosure. They should not be calculated by applying a single percentage to every year.

Behaviour-based penalties

For certain offshore inaccuracies and failures, maximum penalties can reach 100%, 150% or 200% of the tax, depending on the applicable territorial category. The actual range also depends on whether the behaviour was careless, deliberate, or deliberate and concealed.

An error does not, by itself, establish deliberate behaviour. Our review would examine how it arose, what information was available and what steps were taken to comply.

Failure to Correct penalties

A separate Failure to Correct regime can apply to qualifying historic offshore non-compliance that was not corrected by the relevant deadline, generally 30 September 2018. Its application requires consideration of the underlying liabilities and statutory conditions.

The standard penalty is 200% of the relevant tax. Subject to the rules, disclosure reductions can bring this down to a minimum of 100% for a voluntary disclosure or 150% for a non-voluntary disclosure. Additional asset-related penalties can apply in qualifying cases.

These potential penalties make it important to assess the applicable regime, supporting evidence and any available statutory defence before submitting a disclosure.

Interest on unpaid tax

Late-payment interest is separate from any penalty. It generally runs from the original payment due date, rather than the date on which an omission is identified or disclosed. Interest can continue on outstanding amounts under a payment arrangement.

HMRC's main late-payment interest rate is linked to the Bank of England base rate. Since 6 April 2025, the applicable margin has been four percentage points above base rate. A historic calculation must use the rates applying over the relevant periods, rather than applying today's rate throughout.

Our disclosure calculations would therefore identify the original payment dates and calculate interest alongside the tax and penalties.

How many years need to be reviewed?

The disclosure period depends on the tax involved, the circumstances of the omission and the relevant statutory assessment limits. For income tax and capital gains tax, the principal limits include:

Circumstances	Potential assessment period
Ordinary assessment time limit	Four years
Loss of tax brought about carelessly	Six years
Qualifying offshore matters or transfers	Twelve years
Deliberate behaviour, or certain failures to notify	Twenty years

These are not interchangeable rules. The offshore extension is subject to commencement provisions and exceptions, including circumstances involving relevant overseas information already received by HMRC. Separate considerations can apply to other taxes.

We would establish the relevant years before finalising the disclosure, rather than assuming that every offshore case requires a twelve-year review.

Prompted and unprompted disclosures

For behaviour-based penalties, an unprompted disclosure is generally one made when the taxpayer has no reason to believe that HMRC has discovered, or is about to discover, the issue. Otherwise, it is prompted. This distinction can materially affect the available penalty reduction.

The effect of an HMRC letter must therefore be assessed against its wording, the issue disclosed and the surrounding circumstances. It is not sufficient simply to ask whether a formal enquiry has started.

We recommend seeking advice when a potential omission is identified. However, the penalty outcome cannot be guaranteed: timing is one factor, alongside the applicable regime, behaviour and quality of the disclosure.

How we can help

We assist expatriates and internationally mobile individuals in reviewing potential omissions and preparing appropriate disclosures.

Our approach is to:

Establish the facts: Review residence history, income, assets, returns and relevant correspondence.
Determine the correct treatment: Identify reporting obligations, available reliefs and any additional tax.
Define the disclosure period: Establish which years fall within the applicable assessment limits.
Assess penalties: Consider behaviour, disclosure status and the relevant statutory regime.
Prepare the submission: Compile calculations and supporting explanations for the appropriate disclosure route.
Manage HMRC correspondence: Address follow-up questions and discuss payment arrangements where required.

Our objective is a complete, accurate and properly supported submission, not simply a calculation of undeclared income.

Discuss your position in confidence

If you have received an HMRC letter concerning overseas income or assets, or believe that a previous return may be incomplete, we can help you establish whether corrective action is required.

Contact our tax team for a confidential review of your circumstances and the appropriate next steps.

This article provides general information and does not constitute personal tax or legal advice. Disclosure procedures, assessment time limits, penalties and interest depend on the applicable legislation and the facts of each case. Obtain advice tailored to your circumstances before responding to HMRC or making a disclosure.

Offshore Tax Disclosures: A Guide for Expatriates and Internationally Mobile Individuals