US-UK Tax Talk
Welcome to US-UK Tax Talk, brought to you by Collyer Bristow. Hosted by Aidan Grant, a Partner in our Tax & Estate Planning team, this series explores the complex world of cross-border tax and estate planning.
Aidan specialises in advising high-net-worth individuals with UK-US interests, including mixed-domicile marriages, UK-resident US citizens, and beneficiaries of US trusts. Named in Citywealth’s Top 100 Future Leaders, he brings expert insight and practical advice to every episode.
Join us as we engage with leading professionals across the UK and US, covering everything from wills and trusts to charity tax, and moving to the UK. Expect straight-talking discussions on English tax law - always with a US perspective.
Subscribe now and stay informed on the latest in UK-US tax and estate planning. For expert advice tailored to your needs, visit collyerbristow.com.
Disclaimer: This content is provided for general information only and does not constitute legal or other professional advice. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information contained in this material.
US-UK Tax Talk
UK Tax Audits and Investigations: How to Deal with HMRC
In this episode of US-UK Tax Talk, host Aidan Grant is joined by James Austen, Partner, and Henry Lopes, Associate in the Tax & Estate Planning team at Collyer Bristow, for a practical and candid discussion on HMRC inquiries, tax disputes, and what taxpayers should do when things go wrong.
Drawing on extensive experience in both tax advisory and litigation, James and Henry explain how HMRC inquiries arise, the different forms of non-compliance, and why cross-border taxpayers, particularly Americans living in the UK, are disproportionately exposed to investigation risk. The conversation explores how misunderstandings between the US and UK tax systems, especially around entities like LLCs and US trusts, often lead well-intentioned taxpayers into non-compliance.
Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our Tax & Estate Planning team.
Key Take Aways
Non-Compliance Takes Many Forms
UK tax non-compliance is not limited to deliberate wrongdoing. It can include filing late, filing incorrectly, paying tax in the wrong country, or failing to disclose income due to misunderstandings between tax systems. Many US-UK issues arise despite good intentions.
Cross-Border Taxpayers Face Higher Risk
Americans in the UK often remain fully compliant with the IRS while unintentionally failing UK obligations. Structures like US LLCs and living trusts are common sources of inquiry because the UK frequently taxes them differently from the US.
Seek Advice Immediately
Once a taxpayer becomes aware of potential non-compliance, the clock starts ticking. HMRC may treat delays of as little as 3-6 months as careless conduct, increasing penalties. Prompt professional advice is critical.
Going to HMRC First Matters
Unprompted voluntary disclosure significantly reduces penalties. If HMRC contacts the taxpayer first, penalties can rise dramatically, in some cases up to 100% or more of the tax due.
Disclosure Facilities Are Procedural, Not Lenient
The Worldwide Disclosure Facility and Digital Disclosure Facility provide a method to disclose errors, but they do not offer penalty amnesties. Taxpayers typically have 90 days to prepare full disclosures, which is often much tighter than expected.
Penalties Depend on Behaviour
Penalties are driven by culpability: innocent error, carelessness, or deliberate conduct. Demonstrating cooperation, transparency, and prompt disclosure can substantially reduce penalty exposure.
Litigation Is a Last Resort
Most disputes settle through correspondence. Tribunal litigation is expensive, time-consuming, and uncertain. Even successful taxpayers usually cannot recover legal costs at First-tier Tribunal level.
Record-Keeping Is Essential
Taxpayers may need to defend returns going back up to 20 years in serious cases. Maintaining accurate, long-term records is crucial, even when issues arise decades later.
Don’t Panic - but Don’t Ignore It
Disagreements with HMRC are common in a complex tax system. With proper advice and a structured approach, even serious issues are usually manageable and less catastrophic than feared.
