Remittance basis 2011-12: HMRC exercise

Personal Tax International is the department of HMRC that deals with inward-bound assignees and their employers.

They has just announced an education exercise which will consist of making contact with our customers who are taxed on the Remittance Basis on their 2011-12 tax returns by issuing a letter later this month.

Please note that copies of letter will NOT be sent to taxpayer's agents.

The initial letters will be sent to those taxpayers who have actually paid the non-domicile levy for 2011/12, with a second exercise later in the year aimed at non-domiciled taxpayers who have been in the UK for less than seven of the last nine tax years and therefore not required to pay the levy.

HMRC state that:

Our research has shown that some of our customers who are taxed on the remittance basis may not understand fully what a remittance is and may therefore experience some difficulty in completing their tax return accurately. In order to address this we intend to contact our remittance basis customers and provide some information on remittances: a copy of this letter is attached for your information. We will also be providing a list of the types of situations in which remittances can occur. The list is not intended to be exhaustive but we hope it will be of assistance to our customers.

The intention behind these letters is primarily educational. However, they prompt customers to conclude that they need some further help in this area or that they may have omitted remittances from their returns, we are inviting them to call us or speak to their agent (if they have one) in order to take the appropriate action to correct the position.

Taxpayers will be sent the letter, together with an accompanying checklist explaining the many different forms that a remittance can take.

Unlike their many campaigns, HMRC have not indicated at present what terms they will be offering for the disclosure of any undeclared income and/or capital gains. Furthermore, it is unclear at this stage whether HMRC will treat a taxpayer who does come forward under this initiative as having made a voluntary or prompted disclosure which is, of course, key to establishing the level of any penalties.