Risk & Intelligence Service

What is HMRC's Risk & Intelligence Service?

Following the Requirement to Correct Legislation deadline of 30 September and the extension of this deadline using the Worldwide Disclosure Facility without incurring the higher level of penalties introduced by the Requirement to Correct legislation HMRC are now issuing letters from their Risk Intelligence Service to individuals where they have received information under the Automatic Exchange of Information regulations with other countries which suggests that they have offshore information.

The letters explain that HMRC have information which shows that an individual may have received overseas income or gains which is taxable in the UK.

The letter stresses that the individual should check that they have declared any income or gains from overseas assets to HMRC.

Enclosed with the letter is a form called a Certificate of Tax position where HMRC ask that the individual either confirm that they have further tax to pay and that they intend to disclose all of the UK tax irregularities using HMRC's Worldwide Disclosure Facility or that they sign a certificate to state that the tax affairs do not need updating and that there is no additional tax due.

The form includes a statement that the individual in signing the form knows that making a false statement is a criminal offence and can result in investigation and prosecution.

The statement in bold at the end of the certificate states that HMRC will use the information HMRC have to check whether the statement made on the certificate is correct. Normally we would expect that HMRC would have checked this information against the tax return already but given this statement it appears they are taking a 'send out letters and see what comes out of the woodwork' approach. This is understandable given the wealth of information they are receiving and the work that would be needed to check it all, but in our view bad practice.

If someone has made errors with regards to their tax affairs it is the correct thing to do to put these right and there is the alternative of the Contractual Disclosure Facility. Find out more about the Contractual Disclosure Facility.

Received a Risk & Intelligence Service letter?

We are sure that most people who receive the letter will have declared their income and they are left with three choices. Send back the form, communicate with HMRC but not using their form or ignore it.

HMRC has no legal right to ask anyone to sign a form of this nature and there is no statutory authority to allow HMRC to insist on a signed form. We would never recommend that anyone sign a form including the statements HMRC are asking for without there having been a tax investigation where it was established that someone had deliberately not informed HMRC of all their income and gains. HMRC will state things like ‘if you have nothing to hide why not sign the form', but our counter argument is if HMRC have no legal right to it why should someone do such a thing.

An alternative would be a suitably worded letter stating that for many reasons they will not return a signed form but as far as the person is aware, they have declared all their offshore income subject to UK tax. We would suggest that this letter is better coming from a professional advisor.

Sending such a form or letter back to HMRC does not mean that they will put aside information and never check it. In our view this will merely push it down the queue to be looked at.

The third option of ignoring HMRC and not returning the form will probably mean that they will look at these cases and their information first.

It should be noted that the information held by HMRC is not necessarily one hundred percent accurate and may only be part of the offshore picture of an individual's financial affairs.

If the information does not match HMRC will assume that what they hold is correct and that the person who has discrepancies is guilty of tax evasion and it is therefore imperative that if HMRC start to ask more specific questions that an advisor who is familiar with the range of HMRC’s powers and procedures is engaged as often HMRC ask for information they are not entitled to and this is provided which then leads to more questions.