What Happens If You Get the FIG Regime Wrong: Penalties, Enquiries and How to Put It Right

Almost every FIG problem we see falls into one of five patterns. The table summarises them; the sections below explain what each one triggers.

The eligibility failure is the most expensive because it is total. The regime needs at least 10 consecutive tax years of non-UK residence, each judged under the Statutory Residence Test, immediately before your first year back (GOV.UK). One accidental resident year inside that run, a long UK stay during a redundancy, a pandemic year that tipped over the day counts, and every FIG claim built on it collapses at once. Our guides to who qualifies by arrival year and the returning-expat rules cover the counting in detail.

The quantification failure is subtler. HMRC's manual is explicit that relief must be claimed source by source and that the amount must be quantified in the return: not quantifying a claim at all invalidates it, although a claim that is quantified incorrectly is not invalidated, and relief is limited to the amount actually claimed (RFIG42100, HMRC). So a return that ticks the boxes but reports no amounts has claimed nothing, and a return that understates the foreign income has relieved only the understated figure, leaving the rest taxable.

The first line of HMRC scrutiny is the enquiry. For a return filed on time, HMRC has 12 months from the date it receives the return to open an enquiry into anything in it, including a FIG claim (EM1506, HMRC). File your 2025/26 return in January 2027 and the enquiry window runs to January 2028. File late and the window extends to the quarter day following the first anniversary of the date you actually filed.

Surviving the enquiry window is not the end. Where tax has been lost, HMRC can raise a discovery assessment long after the window closes, and the reach depends on behaviour: 4 years as standard, 6 years where the loss arose from careless behaviour, and 20 years where it was deliberate (CH51300, HMRC). For offshore matters there is a further extension: from 2015/16 onwards, assessments involving offshore income or assets can be made up to 12 years after the end of the tax year, even where the taxpayer took reasonable care, unless HMRC already held the relevant overseas information in time to act within the normal limits (CH53510, HMRC).

The practical point: a FIG error made this filing season does not quietly expire in a year or two. Because foreign income is by definition an offshore matter, a 2025/26 mistake can still be assessed in the late 2030s. And HMRC does not need to go looking: over 100 countries exchange financial account information with the UK automatically under the Common Reporting Standard, which is the data behind the nudge letters we cover in our Worldwide Disclosure guide.

Penalties for inaccuracies and failures involving offshore matters are higher than the domestic equivalents, and they scale with the territory where the income arose. HMRC's factsheet CC/FS17 groups territories into three categories by how readily they share information with the UK, with maximum penalties of 100% of the tax for category 1, 150% for category 2 and 200% for category 3 (CC/FS17, GOV.UK).

Two further charges can sit on top. Moving assets between territories in an attempt to conceal non-compliance adds a penalty equal to 50% of the underlying penalty, and in serious cases an asset-based penalty applies, capped at the lower of 10% of the asset's value and 10 times the offshore tax at stake (CC/FS17, GOV.UK). Interest runs on the unpaid tax throughout.

Make that concrete. Suppose a failed FIG claim leaves £20,000 of UK tax understated on foreign investment income from a category 1 territory, and HMRC treats the error as careless. Disclosed voluntarily before HMRC makes contact, the penalty can be reduced to nil, leaving tax and interest only. Disclosed only after an HMRC letter, the minimum is 15%, so £3,000 on top. If the behaviour is judged deliberate, the prompted range starts at 45%: £9,000 of penalty on the same £20,000 of tax. Same error, three very different bills, and the difference is almost entirely about who moved first and what the paper trail shows.

For completeness: the harshest offshore penalties, up to 200% of the tax with a minimum of 100% even on voluntary disclosure, belong to the Failure to Correct regime, which applies to older offshore non-compliance that should have been corrected by 30 September 2018 (CH123405, HMRC; GOV.UK). A FIG-era mistake made from 2025/26 onwards is not itself a Failure to Correct case, but reviews of new arrivers' affairs regularly surface older undeclared offshore income, from years before departure or during a previous UK stint, and those legacy years can fall into that regime. If a review turns up anything old, it needs handling deliberately, not hopefully.

Caught early, most FIG errors are cheap to fix. You can amend a Self Assessment return within 12 months of the filing deadline: for a 2025/26 return, that means amending by 31 January 2028 (GOV.UK). Within that window you can correct the quantification, add a missed source, withdraw a claim that turns out to lose money, or add a claim you should have made. Helpfully, the FIG claim deadline itself is the same date: HMRC's manual confirms the time limit for making a claim is the anniversary of 31 January following the end of the tax year, 12 months after the normal filing date, so a 2025/26 claim can be made or corrected until 31 January 2028 (RFIG42300, HMRC). After that date, an unclaimed year is lost permanently: there is no late claim.

Once the amendment window has closed, the return cannot simply be resubmitted. If you underpaid tax, GOV.UK directs you to write to HMRC; in practice, where the error involves offshore income, the right route is usually a voluntary disclosure through HMRC's Digital Disclosure Service under the Worldwide Disclosure Facility, the standing route for anyone with UK tax to pay on income from a source outside the UK or assets held outside the UK (GOV.UK). You notify HMRC first, receive a disclosure reference number, and then have 90 days to prepare and submit the full disclosure with your own penalty calculation, with a further 90 days available in complex cases. If you overpaid, for example by claiming FIG in a year where the lost Personal Allowance outweighed the relief, overpayment relief can be claimed up to 4 years after the end of the tax year (GOV.UK).

The sequencing matters enormously. Every penalty range in the table above has a lower floor for unprompted disclosure than for prompted. A disclosure made after HMRC has written to you, and CRS data means it will write, is prompted by definition. The window between realising there is a problem and HMRC noticing it is the cheapest moment you will ever have to fix it.

• Error spotted within 12 months of the filing deadline: amend the return; tax and interest only in most cases.
• Error spotted later, tax underpaid, offshore income involved: voluntary disclosure via the Digital Disclosure Service under the Worldwide Disclosure Facility, before HMRC writes.
• Tax overpaid by a claim that should not have been made: overpayment relief claim, up to 4 years after the end of the tax year.
• Year within the claim deadline but no claim yet made: claim by the anniversary of 31 January following the tax year, which for 2025/26 means 31 January 2028.

Everything above is avoidable, because every failure mode is checkable before filing. The 10-year non-residence run can be reconstructed year by year under the SRT before any claim is made. The claim can be quantified source by source from statements gathered during the year, which is why record keeping matters so much for FIG years. The arrival-year maths can be checked against the fixed four-year window. The lost Personal Allowance and CGT annual exempt amount can be weighed against the relief before the claim goes in, not after. And a complete foreign income schedule means nothing is left off the return to surface in a CRS data match three years later.

This is the real economics of professional preparation. The cost of doing a FIG return properly is a fixed fee you know in advance. The cost of getting it wrong is the tax, plus interest, plus a penalty of up to 100% to 200% of the tax depending on territory and behaviour, plus years of exposure to discovery, plus the professional fees for the disclosure you end up needing anyway. We have never seen the second number come in below the first. Our guide on whether you need an accountant for the FIG regime works through who genuinely can self-file and who should not.

Horizon UK Tax Solutions is a founder-led Chartered Tax Adviser practice with over 10 years' experience, including 7 at a Big Four firm, and FIG returns are exactly the returns we specialise in. Before anything is filed we confirm eligibility against your full residence history, run the claim-or-not arithmetic for the year, quantify every source, and file the SA109 with the claim made correctly and defensibly. If something has already gone wrong, we handle amendments and voluntary disclosures, including Worldwide Disclosure Facility cases, and deal with HMRC on your behalf.

Fees are fixed and agreed upfront, never hourly surprises: personal tax returns from £350, non-resident and expat returns from £550, and complex returns from £750. The first FIG filing season, for 2025/26, is open now with a deadline of 31 January 2027, so this is the right moment to get the first claim done properly; our first filing season guide covers the timetable. Start with a free 30-minute clarity call, or read more about our non-dom and residency services. If you suspect an existing return is wrong, book the call before HMRC writes: the order of events is the single biggest driver of what it costs.