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Tax Compliance & Reporting
Self assessment for people whose affairs cross borders: split-year treatment, foreign income, and the returns HMRC expects where your residence position is not clear-cut.
The same page covers capital gains tax reporting, including the 60-day regime for disposals of UK residential property, where the deadline is easily missed and the penalties are automatic.
Residence & Domicile Advice
Since April 2013, UK tax residence has been governed by the Statutory Residence Test (SRT). The SRT provides legal certainty in almost all scenarios, but at the expense of considerable complexity.
Most taxpayers with international lives will need professional advice to navigate the test, plan around day counts and ties, and evidence their position. Since 6 April 2025 residence matters more than ever, as it now determines both access to the Foreign Income and Gains regime and exposure to inheritance tax.
Residence-Based Taxation (formerly Domicile)
From 6 April 2025 the remittance basis and non-domiciled status were abolished for income tax and capital gains tax, and replaced by the residence-based Foreign Income and Gains (FIG) regime. New arrivers who have not been UK resident in the previous ten tax years may claim relief on their foreign income and gains for their first four years of UK residence.
Inheritance tax moved to a residence-based system on the same date. Domicile is no longer the test: an individual becomes a long-term resident, and within scope of inheritance tax on worldwide assets, once UK resident for ten of the previous twenty tax years. On leaving the UK a tail of between three and ten years applies before worldwide assets fall outside the net. Deemed domicile and formerly domiciled resident status have been abolished.
Transitional rules — including the Temporary Repatriation Facility for foreign income and gains arising before April 2025 — mean careful planning remains essential. We advise both new arrivers and long-term residents on how the new regime applies to them.
Cryptoassets
HMRC treats cryptoassets as property rather than currency. For most individuals this means capital gains tax on disposals, although income tax can apply to mining, staking and airdrop rewards, and to tokens received through employment.
The most commonly missed point is that a disposal does not require converting anything to sterling. Exchanging one token for another, spending crypto on goods or services, and gifting to anyone other than a spouse or civil partner are all disposals for UK tax purposes. Many taxpayers who have never made a fiat withdrawal are nonetheless sitting on substantial unreported gains.
Calculating those gains is rarely straightforward. Share pooling applies, alongside the same-day and 30-day matching rules, and a typical portfolio spans several exchanges and wallets with thousands of transactions. DeFi lending and staking arrangements need particular care, as depending on their terms they can themselves amount to a disposal of the tokens deposited.
HMRC's visibility is increasing sharply
Under the Cryptoasset Reporting Framework (CARF), UK cryptoasset service providers have been required to collect user and transaction data since 1 January 2026. The first reports are due to HMRC by 31 May 2027, covering the 2026 calendar year, with information then exchanged internationally between participating jurisdictions.
In practice this means historic non-compliance is far more likely to surface than it once was. Where past disposals have gone unreported, a voluntary disclosure made before HMRC makes contact remains materially better than the alternative.
Prediction markets
Prediction markets illustrate how quickly the position can become complicated, and the 2026 World Cup, held between 11 June and 19 July, generated a considerable volume of activity among UK residents.
On a platform such as Polymarket, a single wager is given effect through more than one token: funds are held as a stablecoin, typically USDC, which is exchanged for outcome tokens specific to the individual market, with those tokens later sold or redeemed for stablecoin when the market resolves.
Each of those conversions is potentially a separate disposal of a cryptoasset. A position the client thinks of as one bet can therefore generate several chargeable events, and an active account can produce thousands of them across a tax year. The stablecoin leg matters too: USDC tracks the US dollar rather than sterling, so a gain or loss can arise on the stablecoin itself purely from exchange rate movement, even where its dollar value never changes.
There is a further and genuinely unsettled question of characterisation. In February 2026 the Gambling Commission indicated that prediction-market products fall within the definition of a betting intermediary under the Gambling Act 2005. Gambling winnings are not normally subject to UK tax, but it does not automatically follow that the underlying cryptoasset conversions fall outside the capital gains net. That interaction has not been settled, and anyone holding material positions should take advice rather than assume either treatment.
The timing is worth noting. World Cup activity falls into the 2026/27 UK tax year and sits within that first CARF reporting period. The resulting data reaches HMRC by 31 May 2027, whereas the 2026/27 self assessment return is not due until 31 January 2028, so HMRC may hold the transaction data some months before the taxpayer files.
The international dimension
For internationally mobile clients there is a further layer. HMRC's view is that exchange tokens are located where the beneficial owner is resident, which affects how gains are treated on arrival in or departure from the UK, and how they interact with the four-year Foreign Income and Gains regime.
How we can assist
We advise on the UK tax treatment of cryptoasset holdings and transactions, reconstruct transaction histories across exchanges and wallets, prepare defensible capital gains computations and tax return disclosures, handle voluntary disclosures of historic non-compliance, and manage HMRC enquiries where cryptoassets are in point.
Capital Gains Tax on RSUs
Restricted stock units are taxed twice over: once as employment income when they vest, and again as a capital gain when the shares are eventually sold. Most of the problems we see arise at the second stage, because the information the broker provides was never designed for UK purposes.
When RSUs vest, the market value of the shares is charged to income tax and National Insurance, usually through PAYE. That same value becomes the acquisition cost for capital gains purposes, and if it is not carried across the employee is taxed twice on the same amount.
US brokers routinely report a cost basis that excludes the element already taxed as employment income, and in some cases report no basis at all. A UK return prepared from the broker's gain figure will therefore often overstate the gain substantially, in the worst cases by the entire value of the award.
UK share identification rules
The UK does not track shares in tax lots. A disposal is matched first against shares acquired on the same day, then against shares acquired in the following 30 days, and only then against the Section 104 pool, which holds the averaged cost of everything else.
US brokers apply FIFO or specific lot identification, which produces a different answer entirely. With quarterly vesting and periodic sales the 30-day rule is engaged repeatedly, and the two systems diverge further with every transaction. The position has to be rebuilt from the underlying vest and sale records rather than adapted from the broker's statement.
Other points that are routinely missed
Capital gains are computed in sterling. Both the acquisition value at vest and the disposal proceeds must be converted at the rates prevailing on those dates, which means a gain or loss can arise from exchange rate movement alone, even where the dollar value of the shares has not moved.
Shares withheld or sold at vest to fund the income tax and National Insurance charge are themselves disposals for capital gains purposes and need to be reported, even though the resulting gain is usually small.
Dividend equivalents paid on unvested awards are generally taxed as employment income rather than as dividends, which changes both the rate applied and the way they are reported.
Where several years of awards have vested and been sold, errors of this kind compound, and a single mis-stated base cost can distort every subsequent disposal through the Section 104 pool.
For these reasons the position is best reconstructed from first principles rather than corrected piecemeal.
Internationally mobile employees
Where the vesting period covers time spent working outside the UK, part of the employment income arising at vest may fall outside the UK charge, apportioned by reference to workdays over the period from grant to vest. That apportionment affects not only the income tax position but the base cost carried into the capital gains computation, and it interacts with Overseas Workday Relief and the Foreign Income and Gains regime. Getting it right at vest matters years later, when the shares are finally sold.
How we can assist
We rebuild RSU capital gains computations from the underlying vest and sale records, apply the UK matching rules correctly, convert to sterling at the proper dates and prepare the disclosures for your tax return. Where returns have already been filed using broker figures, we can review whether tax has been overpaid and, within the applicable time limits, seek recovery.
HMRC Investigations
HMRC normally has a 12 month window from the date you file your tax return to open an ‘enquiry’. This window is extended if you have amended your tax return or it was submitted late.
Every year, HMRC open thousands of enquiries to ensure a specific tax return or claim therein is correct or to check that income or capital gains have been reported correctly. Another reason is to discourage evasion and ensure public confidence in the fair operation of the tax system; for this reason, some enquiries are made on a random basis.
Responding to an enquiry can be very time consuming and stressful for you, with no recovery of costs available even if the enquiry is closed with no change to the tax return.
For this reason, many clients choose to take out insurance to cover the cost of professional fees incurred during a HMRC investigation.
HMRC Discovery Assessments
HMRC also have additional powers outside of the enquiry window if they discover information that was unavailable to them during the original period or can prove that the tax return was carelessly or deliberately inaccurate. These investigations are known as ‘discovery assessments’ and can be raised up to four, six, or twenty years after the end of relevant tax year depending on HMRC’s view of the taxpayer’s culpability in giving rise to the alleged inaccuracy.
Offshore Matters
In recent years HMRC has been awarded various additional powers (in terms of penalties, time limits, and ‘strict liability’ offences) to investigate matters where there is an offshore aspect, however marginal. In these cases, seeking early professional assistance is vital as the recent legislation provides little sympathy to taxpayers even in cases where most would agree that an innocent mistake was made.
Serious Civil Tax Investigations (COP 8 and COP 9)
Where more serious inaccuracies and/or significant quantities of underpaid tax are suspected, HMRC can employ ‘Code of Practice’ procedures (known as COP8 and COP9 depending on the perceived seriousness of the matter) which are conducted by the Fraud Investigation Service (FIS). These types of investigation are generally more intrusive and require careful management and specialist advice.
How we can assist
We have a great deal of experience in handling all manner of HMRC investigations and we can help manage the process on your behalf, ensuring you have minimal contact with HMRC wherever possible.
In our experience, a taxpayer with professional representation is likely to reach a more favourable enquiry outcome than they would without. The outcome of an enquiry will often depend on knowing your rights as a taxpayer and having the right technical expertise to ensure the correct interpretation of the law is applied to your circumstances.
During this process we will defend your position, assert your statutory rights and, where appropriate, negotiate the best possible settlement for you, including interest, surcharges and penalties, where tax is due as a result.
We always engage constructively and cooperatively with HMRC as this invariably produces the best outcome for our clients.
Depending on the circumstances of each case, we can assist as follows:
Dealing with tax enquiries & discovery assessments raised into the tax affairs of individuals, partnerships, companies, offshore trusts or onshore trusts;
Providing specialist advice to accountants, lawyers, agents and other professionals;
Negotiating tax penalties with a view to achieving maximum mitigation;
Providing advice in relation to the tax tribunal system, along with representation in the First Tier Tribunal;
Resolving conflicts with HMRC and advising on the complaints & appeals process if appropriate;
Preparing reports and submissions for voluntary disclosures to HMRC, including under favourable regimes (‘amnesties’) as and when they become available;
Preparing disclosure reports as required under Code of Practice 9, in cases where serious tax fraud is suspected;
Managing tax investigations being conducted under Code of Practice 8, in serious tax avoidance cases.