Overseas income and gains ?

[Pikba007]

Recieved a nudge letter from hmrc about overseas income and gains with the standard letter and certificate.I do not have any foreign income at all but my share dealing account is based in Cyprus,I assume the letter relates to this as I have no other foreign accounts....on my stocks and share dealing account I have never made a gain over the cgt allowance so have nothing to declare regarding that either.what is the best response to such a letter?...ie fill-in the certificate or write a letter explaining that u have nothing to declare ?

[AGoodman]

Or ignore the certificate and just write a letter in the terms you've said here.

Others may correct me but I don't think the certificate is in any way statutory; it's just a clever wheeze devised by HMRC to focus the mind of the errant taxpayer.

[wamstax]

Depending on the wording on the certificate the simple denial of any irregularities by completing it could lead to other and more serious considerations.

It is impossible to advise on this without a full knowledge of ALL your potential sources and amounts of income and tax liabilities and a full review of your circumstances over say the last 6 (if careless) or 9 years (if omissions relate to foreign income or gains of an individual) - or even up to 20 years (if any omissions were deliberate )

[Pikba007]

There are no foreign accounts at all in my circumstances,over any years,I’m paye with income around 30k a year and only have this trading account that relates to any income!the certificate has 4 options ...1 to disclose via the ww disclorure....2 that my affairs are up to date........3 I have not declared my foreign income or gains as are covered by allowances or reliefs.......4 I have not declared my income or gains as they are not liable to Uk income tax.......the only possible income I have is from my trading account which is below the cgt allowances.

[wamstax]

What about the dividends on the shares.... they do not fall under Capital Gains Tax

[Pikba007]

Well pointed out ,however I have not recieved any dividend at all as the stock I traded in were not distributing dividends,and yes I’m aware of the dividend allowance.I have no foreign bank accounts and have never sent in a past sa......bit stumped?....are these nudge letters being sent out to anyone with any sort of foreign account?

[wamstax]

As AG says they are a crafty wheeze by HMRC that can get results from errant taxpayers without opening an aspect or full enquiry. The certificates in my view have absolutely no legal authority however ignoring them is liable to give you more problems further down the line.

Besides the dividend point my experience of these are that there is probably a linked account handling the funds in and out and the CRS information could have come from any source outside the U.K.

If you can be certain that there is nothing amiss then my personal choice if I was in your position would be to send a response by letter.

[wamstax]

I would however just raise a point that if there was in fact something that you had overlooked then if it subsequently was established that you had omitted income or taxable gains then your “ denial letter” would potentially have HMRC arguing for penalties that resulted from a prompted disclosure and also potentially concealed.

If of course shares were purchased in foreign currency then any U.K. gain would be measured by converting the purchase and sale considerations to GBP at the relevant dates and comparing the differences in GBP to establish the amount of the chargeable gains.

[Pikba007]

Thanks wamstax appreciate your input....I don’t see what else I can do but write a letter as I have not breached the gains limit or dividends.would you advise just pointing the said facts out or sending in a full report of my trading history to prove what I’m saying?....at the moment they are not asking for it but I can’t for one minute believe they are just going to take my word for it?..surely by asking to declare your fully up to date they don’t just leave it at that......ie send a letter back and my full broker account details with it showing no breach of cgt allowance .

[wamstax]

Your choice I am afraid as if you give them full history then somebody might review them in detail and also the source and destination of all monies in and out. AG already said what he would do and as you are not a client - and will not be - anything you decide to do is your own choice I am afraid. All depends on what they have by way of information.