The toolkit was launched on 6 December 2022 and provides guidance on the errors HMRC finds commonly occur in relation to reporting foreign income.
Areas of risk relating to foreign income reporting fall broadly into the following categories including:
Unaware of the need to report
A taxpayer may not realise that income arising outside the UK needs to be reported in the UK to HMRC.
Incorrect understanding of what to report
A taxpayer may have failed to apply the legislation correctly. For example, they might believe that they have fulfilled their obligations by having made a return in the jurisdiction where the income arose but not in the UK.
Unaware of income
A taxpayer may not be aware that the income arises (for example, if it relates to a former overseas employment).
Failure to report
A taxpayer may be aware that they have income and that it should be reported to HMRC but fails to report it anyway.
The content of the foreign income toolkit is based on HMRC’s view of how tax law should be applied. Application to specific cases will depend on the law at the relevant time and on the precise facts.
The tax agents toolkit collection provides further information on using this toolkit and reasonable care under HMRC’s penalty system.
