In an increasingly globalized world, many individuals and businesses hold assets and generate income across multiple jurisdictions. Often, the question we encounter is, “How would HMRC know what assets or income I have abroad?” The short answer is: the significant international developments in the recent years have dramatically improved tax transparency.

A New Era of Tax Transparency
Over the past decade, there has been a concerted effort globally to tackle aggressive tax planning, avoidance, and evasion. Central to these efforts are international agreements that facilitate the automatic exchange of information between tax authorities across borders.
One of the most significant advancements in this area is the Common Reporting Standard (CRS) developed by the Organisation for Economic Co-operation and Development (OECD) and the G20. Over 100 jurisdictions, including the UK, have committed to CRS, enabling them to automatically share information about financial accounts and investments held by taxpayers abroad. This means that if you have assets or income in a participating country, the details are likely being reported back to HMRC.
In the UK, the requirements of the CRS have been incorporated into domestic law through the International Tax Compliance Regulations 2015. These regulations ensure that financial institutions in the UK report relevant information to HMRC, which is then shared with other tax authorities globally, and vice versa.
Information reported:
• Name
• Address
• Jurisdiction of residence
• Tax Identification Number (TIN)
• Date of Birth
• Place of Birth
• Account number or functional equivalent
• Name and identifying number (if any) of Reporting Financial Institution
• Account balance or value
• Total gross amount of interest
• Total gross amount of dividends
• Total gross amount of other income paid or credited to the account
• The total gross proceeds from the sale or redemption of property paid or credited to the account.

Measures Against Evasion and Non-Compliance
However, CRS is just one piece of the puzzle. Recognizing that some may attempt to circumvent these reporting requirements, further measures have been implemented to address these risks. In 2018, the OECD introduced the Model Mandatory Disclosure Rules (MDR) to counteract CRS avoidance schemes and opaque offshore structures. These rules require intermediaries—such as lawyers, accountants, financial advisors, and banks—to disclose any arrangements designed to avoid CRS reporting or obscure the identification of beneficial owners.
Additionally, the European Union introduced Directive 2018/822 (known as DAC 6), which mandates the reporting of aggressive cross-border tax-planning arrangements. Following Brexit, the UK has transitioned to implementing the OECD’s MDR, further aligning with international tax transparency standards.
The UK’s Commitment to International Standards
The UK’s commitment to these international standards is evident in its legislative actions. For example, the International Tax Enforcement (Disclosable Arrangements) Regulations 2023 came into force in March 2023, replacing the previous DAC 6 rules. This marks the UK’s full transition from European to international tax transparency rules.

In Summary
To answer the original question—how would HMRC know what assets or income you have abroad? The answer lies in the robust and interconnected framework of international agreements and domestic regulations designed to ensure transparency and combat tax evasion. Through initiatives like CRS, MDR, and DAC 6, tax authorities worldwide, including HMRC, have unprecedented access to information about taxpayers’ global financial activities.
For taxpayers, this means that full transparency and compliance are more important than ever. It’s not just about following the rules—it’s about understanding that the global landscape of tax enforcement has fundamentally changed.

To ensure you are compliant with your multi-jurisdictional tax affairs, please contact us for an initial consultation.

The Policy paper on changes to the taxation of non-UK domiciled individuals has been published on gov.uk on 29^th July 2024.

The changes are now definitely on the way! Are you/your family prepared?

Key updates include:

• From 6 April 2025, the domicile status will be replaced with a new residence-based tax regime.
• New Foreign Income and Gains (FIG) Regime for new arrivals – 100% tax relief on foreign income and gains will be provided for the first four years, if they haven’t been UK tax residents in the last 10 years. This replaces the current remittance basis.
• The protection for income and gains within settlor-interested trust structures for non-domiciled individuals will end for those not eligible for the FIG regime.
• Offshore anti-avoidance laws will be updated to be clearer and more effective, with no changes expected before the 2026/27 tax year.
• A form of Overseas Workday Relief will remain, with details to be announced in the Budget.

Transitional Arrangements:

• The previously proposed 50% tax reduction on foreign income will not be introduced.
• CGT will apply normally to those ineligible for the FIG regime.
• Pre-6 April 2025 FIG will be taxed when remitted to the UK.
• A Temporary Repatriation Facility (TRF) will allow reduced tax rates on remitted FIG for a limited period after the remittance basis ends. Expansion of the TRF’s scope is being considered.

Inheritance Tax (IHT) Changes:

• From 6 April 2025, IHT will be residence-based, affecting property scope for individuals and trusts.
• Non-UK assets will be in scope for IHT if a person has been UK resident for 10 years before the tax year of the event, and for 10 years after leaving the UK.
• Excluded Property Trusts will no longer keep assets out of IHT. Existing trusts will have transitional arrangements for adjustment.

Further details will be provided at the Budget and the government will review stakeholder feedback.

For an initial discussion on how this may impact your affairs, please contact us.

Because tax efficiency is complicated enough!…

At the beginning of each tax year, HMRC issues a PAYE notice of coding, also known as a P2 form, informing taxpayers of their tax code. The notice of coding explains how the tax code has been made up by HMRC and will include any expenses and benefits relating to an individual’s employment.

Individuals with earnings from employment and/or any occupational pensions from previous jobs normally have their income tax deducted under the PAYE system. This system should collect the right amount of tax from most people each year, however, this is not always the case, due to incorrect PAYE notices being issued by HMRC. These notices are then applied by the employer or pension providers, leading to individuals over-paying or under-paying income tax.

It is not uncommon for individuals to be over-paying or under-paying income tax, as a result of an incorrect PAYE coding being issued by HMRC. As households continuously look for ways to offset rising bills to manage the cost-of-living squeeze, it is important that individuals make it a habit to review the coding notices, once received and take the necessary steps to ensure they aren’t in for a big surprise.

It is important to note that any shortfall of tax arising due to an incorrect tax code is the individual’s responsibility, not the employer’s or pension provider’s, as it is often assumed. Individuals should therefore consider these steps to avoid any financial shocks as households look to offset soaring fuel costs and food bills amidst the cost-of-living crisis.

Underpayments of tax from a previous tax year may also be reflected in the tax code. These are often estimated based on the records available to HMRC. As the notice of coding is generally issued automatically, errors can occur, leading to the creation of incorrect tax codes.

Errors may be due to a number of reasons, including:

• the individual was given the annual tax-free personal allowance against more than one job or pension;
• a taxable social security benefit or state pension was not taken into account in the annual tax code;
• the individual received allowances which were not due to them, or have not received some that were due;
• the individual has untaxed income, or incorrect work expenses included in their PAYE code; and
• the incorrect processing of P45 and P46 forms when changing employment.

Some people are more at risk of receiving incorrect tax bills if:

• they are new to employment, have multiple employments, or have changed jobs during the tax year (students often fall into these categories);
• they have been issued with a no tax (NT) code in error; and
• they are employed but also receive a taxable state benefit, state pension or occupational pension.

In most cases, the individuals affected, are on the lower income scale. This can usually be explained by the fact that these taxpayers consider their affairs to be too simple to worry about as all their income tax deductions are done via the PAYE system.

However, as people pay more attention to their financial circumstances to offset rising costs, taxpayers should ensure they are checking their PAYE notifications in a timely manner and, where unsure on whether or not information listed in the P2 form is correct, seek clarification from HMRC or a professional adviser. Individuals can request tax code corrections by calling HMRC’s self-assessment service, and can receive further support from a qualified tax advisor they may be working with, or from TaxAid, a charity that helps people on low income with their tax affairs and tax coding issues.

We check our clients PAYE coding notice as a standard and take appropriate action to make sure that action is taken as soon as possible.

Because tax efficiency is complicated enough!…

Need a tax advisor but not sure where to start with your search? Here are essential traits to look for when identifying a skilled tax advisor:
1️⃣ Professional Qualifications: Ensure your tax advisor holds recognized qualifications such as ATT, CTA, or STEP. These designations demonstrate a commitment to ongoing professional development and adherence to high ethical standards.
2️⃣ Industry Experience: Experience is the cornerstone of tax expertise. Seek advisors with a proven track record in your specific industry. They will possess a deep understanding of sector-specific regulations, ensuring tailored and effective advice.
3️⃣ Communication Skills: Tax matters can be complex, but a qualified advisor simplifies jargon and communicates effectively. Look for someone who can explain confusing concepts in a clear and understandable way.
5️⃣ Up-to-Date Knowledge: Tax rules are subject to frequent changes. A qualified advisor stays abreast of the latest legislative developments. Tax advisors who are members of the regulated bodies mentioned above have a requirement to complete a set amount of learning hours per year.
6️⃣ Client References: A strong reputation is built on satisfied clients. Seek recommendations or testimonials from businesses or individuals with similar tax needs.
7️⃣ Ethical Standards: Integrity is non-negotiable. Ensure your advisor adheres to ethical standards set by professional bodies. This guarantees that your tax affairs are handled with the utmost integrity and compliance.
In the search for a qualified UK tax advisor, remember, the right advisor is not just a service provider but a strategic partner dedicated to your financial success.
At TARI CTA Limited, we are proud members of both ATT and CTA bodies, as well as being a STEP affiliate and are happy to offer a no-commitment initial conversation about your personal or your business’ tax affairs.

Because tax efficiency is complicated enough!…