Why HMRC sent you a nudge letter
HMRC sends nudge letters in batches when its systems cannot comfortably match data it holds against your tax returns. For offshore letters, that data almost always arrives automatically under the Common Reporting Standard: overseas financial institutions report account balances, interest, dividends and sale proceeds to HMRC every year. Common triggers include overseas bank interest, foreign rental income, dividends through a foreign broker, and cryptoassets on overseas exchanges. The letter does not mean HMRC is right: exchanged data can be duplicated, shown gross rather than net, or attached to the wrong person. It does mean HMRC is looking.
The Certificate of Tax Position trap
Most offshore nudge letters enclose a Certificate of Tax Position inviting you to certify that your tax affairs are correct and complete. There is no statutory requirement to sign it, it covers your entire tax position with no year limit or minimum threshold, and a false declaration can have serious consequences, in the worst case criminal prosecution. Guidance issued to Chartered Institute of Taxation members favours replying fully by letter instead, and HMRC has confirmed it will accept a response by letter. Cooperate fully, but do not sign the certificate without professional advice.
How to respond
Check your position properly first, because genuinely nil outcomes are common: non-residence, treaty relief, or the remittance basis for years up to 2024/25 can all mean nothing is due, and the right response is then a reasoned written reply with supporting evidence. If tax is owed on an offshore issue, the usual route is the Worldwide Disclosure Facility: you notify HMRC through the Digital Disclosure Service, receive a disclosure reference number, then have 90 days to calculate and submit the disclosure with payment. Penalties depend on behaviour and territory, from nil for reasonable care up to 200% of the tax. Our guide to the Worldwide Disclosure Facility covers the full process.