Readers’ forum: Correcting careless taxpayer’s affairs

Undeclared overseas income

A client has been approached by HMRC with a generic ‘we believe you have some undeclared overseas income’. Having undertaken a comprehensive review of the client’s affairs we discovered undeclared overseas bank interest income which commenced three years ago and which the client did not consider as taxable in the UK (as it was tax free in the overseas territory) – although it very clearly is.

The amounts are not huge – about £3 200 for each of 2018-19 2019-20 and 2020-21 – and having regard to the client’s other income (UK employment of some £71 000) we have established an underpayment of income tax. The client accepted her behaviour here as careless however doubt has arisen as to the best course of action in bringing her affairs up to date. The client has never filed a tax return and her income was always...