WorldWide Disclosure Vs Tax Return on an Offshore Life Insurance

[pcmc]

Hello All,

This is my very first post so please excuse my ignorance and redirect me if
this is not the right forum to post this question.

I have recently received a letter from HMRC saying they are aware of
some offshore gain I have and asked me to fill out a certificate of tax position form.

I believe it may be relating to a life insurance with profit policy that matured in October 2020.
Since then I have transferred almost all of the proceed back to a bank in the UK, leaving a small amount (£1K) balance in that bank.

When I started that life insurance policy, I have assumed any life insurance proceed is not taxable.
I have just searched the UK gov site and found the "HS321 Gains on foreign life insurance policies (2019)".
I now believe the gain is subject to the income tax.

The question I have is that is it too late to fill in the self assessment tax return for 2020-2021 to include the
gain from this life insurance policy?

An alternative is to fill out the WorldWide Disclosure Facility mentioned in the HMRC letter.
But a brief look on it seems to suggest it is a lot more complex.

Just to add that I don't have any offshore asset other than that bank account with a small balance.

Can anyone care to shed any advice or experience you have?

Many thanks in advance.

[bd6759]

2020-21 does not end until 5 April 2021. It is still too EARLY to complete one.

HMRC would not write to you about an October 2020 event. It must be something else.

[pcmc]

Thanks for your response.

That is really puzzling to me.

Does it mean I have to approach HMRC in order to find out what they are really after?

[pcmc]

Just another thought.

Could it be that HMRC is wondering why I have never declared that offshore bank account?

The simple reason is that until the payout of the life insurance policy, I have just kept about £10K in the account for use
when I holiday there.

The interest on saving is so low, I don't take much notice about this offshore account.

Could the omission of declaring the offshore account be the problem?

[pcmc]

Hello BD6759,

You wrote:
"2020-21 does not end until 5 April 2021. It is still too EARLY to complete one."

I have just learned that the deadline for submitted a tax return for 2020-2021 is 1 February.

Is that correct?

I am somewhat confused here.

[someone]

The tax year runs 6th April -> 5th April.

So the deadline for the 6th April 19 -> 5th April 20 is 31st Jan 2021.

Anything (residential property is an exception) happening on or after 5th April 2020 is in the 20-21 tax year for which the deadline is 31st Jan 2022.

[bd6759]

I have just learned that the deadline for submitted a tax return for 2020-2021 is 1 February.

No you have not

[pcmc]

Thanks for all your replies.

I have phoned up HMRC and understood what they have frown about.
On the last day of my holiday two years ago, I put the unspent money into my saving account.
I need to prove the source of money was not from offshore employment or property rent.
It was one off and that value was not that high, but they seem to be quite serious about this.

At one stage I was wondering if the relatively small amount (< £40 ) of interests a year from the offshore saving account
needs to be declared and taxed. It seems to be quite an overkill in filling the Worldwide disclosure for such a small interest.