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EPISODE DESCRIPTION
In this episode of US-UK Tax Talk, host Aidan Grant is joined by James Austen, Partner, and Henry Lopes, Associate in the Tax & Estate Planning team at Collyer Bristow, for a practical and candid discussion on HMRC inquiries, tax disputes, and what taxpayers should do when things go wrong.
Drawing on extensive experience in both tax advisory and litigation, James and Henry explain how HMRC inquiries arise, the different forms of non-compliance, and why cross-border taxpayers, particularly Americans living in the UK, are disproportionately exposed to investigation risk. The conversation explores how misunderstandings between the US and UK tax systems, especially around entities like LLCs and US trusts, often lead well-intentioned taxpayers into non-compliance.
Aidan, James, and Henry walk listeners through the entire lifecycle of an HMRC inquiry: from discovering an error, deciding whether and how to disclose, navigating the Worldwide Disclosure Facility, negotiating penalties, and understanding when disputes escalate into tribunal litigation. The episode demystifies penalties, carelessness versus innocent error, record-keeping obligations, and why timing and transparency are critical.
While tax disputes can feel intimidating, the team stress that most cases settle without litigation, and that early advice, full disclosure, and a commercial approach dramatically improve outcomes. The episode also provides a realistic view of tribunal costs, litigation risks, and why fighting HMRC “on principle” rarely ends well.
Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our Tax & Estate Planning team.
Key Take Aways
Non-Compliance Takes Many Forms: UK tax non-compliance is not limited to deliberate wrongdoing. It can include filing late, filing incorrectly, paying tax in the wrong country, or failing to disclose income due to misunderstandings between tax systems. Many US-UK issues arise despite good intentions.
Cross-Border Taxpayers Face Higher Risk: Americans in the UK often remain fully compliant with the IRS while unintentionally failing UK obligations. Structures like US LLCs and living trusts are common sources of inquiry because the UK frequently taxes them differently from the US.
Seek Advice Immediately: Once a taxpayer becomes aware of potential non-compliance, the clock starts ticking. HMRC may treat delays of as little as 3-6 months as careless conduct, increasing penalties. Prompt professional advice is critical.
Going to HMRC First Matters: Unprompted voluntary disclosure significantly reduces penalties. If HMRC contacts the taxpayer first, penalties can rise dramatically, in some cases up to 100% or more of the tax due.
Disclosure Facilities Are Procedural, Not Lenient: The Worldwide Disclosure Facility and Digital Disclosure Facility provide a method to disclose errors, but they do not offer penalty amnesties. Taxpayers typically have 90 days to prepare full disclosures, which is often much tighter than expected.
Penalties Depend on Behaviour: Penalties are driven by culpability: innocent error, carelessness, or deliberate conduct. Demonstrating cooperation, transparency, and prompt disclosure can substantially reduce penalty exposure.
Litigation Is a Last Resort: Most disputes settle through correspondence. Tribunal litigation is expensive, time-consuming, and uncertain. Even successful taxpayers usually cannot recover legal costs at First-tier Tribunal level.
Record-Keeping Is Essential: Taxpayers may need to defend returns going back up to 20 years in serious cases. Maintaining accurate, long-term records is crucial, even when issues arise decades later.
Don’t Panic – but Don’t Ignore It: Disagreements with HMRC are common in a complex tax system. With proper advice and a structured approach, even serious issues are usually manageable and less catastrophic than feared.
Disclaimer: This content is provided for general information only and does not constitute legal or other professional advice. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information contained in this material.
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Specialising in International trusts, tax & estate planning, Private wealth, UK trusts, tax & estate planning and US/UK Tax & estate planning
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This episode of US-UK Tax Talk hosts practical and candid discussion on HMRC inquiries, tax disputes, and what taxpayers should do when things go wrong.
Published 8 January 2026
INTERNATIONAL TRUSTS, TAX AND ESTATE PLANNING & PRIVATE WEALTH & TAX & ESTATE PLANNING & UK/USA TAX & ESTATE PLANNING & UK/USA TAX & ESTATE PLANNING
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Partner
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In this episode of US-UK Tax Talk, host Aidan Grant is joined by James Austen, Partner, and Henry Lopes, Associate in the Tax & Estate Planning team at Collyer Bristow, for a practical and candid discussion on HMRC inquiries, tax disputes, and what taxpayers should do when things go wrong.
Drawing on extensive experience in both tax advisory and litigation, James and Henry explain how HMRC inquiries arise, the different forms of non-compliance, and why cross-border taxpayers, particularly Americans living in the UK, are disproportionately exposed to investigation risk. The conversation explores how misunderstandings between the US and UK tax systems, especially around entities like LLCs and US trusts, often lead well-intentioned taxpayers into non-compliance.
Aidan, James, and Henry walk listeners through the entire lifecycle of an HMRC inquiry: from discovering an error, deciding whether and how to disclose, navigating the Worldwide Disclosure Facility, negotiating penalties, and understanding when disputes escalate into tribunal litigation. The episode demystifies penalties, carelessness versus innocent error, record-keeping obligations, and why timing and transparency are critical.
While tax disputes can feel intimidating, the team stress that most cases settle without litigation, and that early advice, full disclosure, and a commercial approach dramatically improve outcomes. The episode also provides a realistic view of tribunal costs, litigation risks, and why fighting HMRC “on principle” rarely ends well.
Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow. Watch recent episodes on Collyer Bristow’s YouTube channel, and connect with our Tax & Estate Planning team.
Key Take Aways
Non-Compliance Takes Many Forms: UK tax non-compliance is not limited to deliberate wrongdoing. It can include filing late, filing incorrectly, paying tax in the wrong country, or failing to disclose income due to misunderstandings between tax systems. Many US-UK issues arise despite good intentions.
Cross-Border Taxpayers Face Higher Risk: Americans in the UK often remain fully compliant with the IRS while unintentionally failing UK obligations. Structures like US LLCs and living trusts are common sources of inquiry because the UK frequently taxes them differently from the US.
Seek Advice Immediately: Once a taxpayer becomes aware of potential non-compliance, the clock starts ticking. HMRC may treat delays of as little as 3-6 months as careless conduct, increasing penalties. Prompt professional advice is critical.
Going to HMRC First Matters: Unprompted voluntary disclosure significantly reduces penalties. If HMRC contacts the taxpayer first, penalties can rise dramatically, in some cases up to 100% or more of the tax due.
Disclosure Facilities Are Procedural, Not Lenient: The Worldwide Disclosure Facility and Digital Disclosure Facility provide a method to disclose errors, but they do not offer penalty amnesties. Taxpayers typically have 90 days to prepare full disclosures, which is often much tighter than expected.
Penalties Depend on Behaviour: Penalties are driven by culpability: innocent error, carelessness, or deliberate conduct. Demonstrating cooperation, transparency, and prompt disclosure can substantially reduce penalty exposure.
Litigation Is a Last Resort: Most disputes settle through correspondence. Tribunal litigation is expensive, time-consuming, and uncertain. Even successful taxpayers usually cannot recover legal costs at First-tier Tribunal level.
Record-Keeping Is Essential: Taxpayers may need to defend returns going back up to 20 years in serious cases. Maintaining accurate, long-term records is crucial, even when issues arise decades later.
Don’t Panic – but Don’t Ignore It: Disagreements with HMRC are common in a complex tax system. With proper advice and a structured approach, even serious issues are usually manageable and less catastrophic than feared.
Need some more information? Make an enquiry below.
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Specialising in International trusts, tax & estate planning, Private wealth, UK trusts, tax & estate planning and US/UK Tax & estate planning
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