Your financial footprint is global – is your tax?
For individuals with ties to more than one tax jurisdiction, the risk of non-compliance often arises not from deliberate wrongdoing, but from a lack of awareness. Here’s what you need to know to stay on top of your cross-border tax obligations.
Savannah Johnston ● Jun 26, 2025
We frequently work with clients who believed they were fully compliant, only to later uncover gaps in their tax reporting that could lead to serious financial consequences.
It’s a clear reminder that even well-intentioned individuals can fall foul of international tax obligations simply by not understanding the rules.
The cross-border trap
A common scenario we encounter involves individuals who are UK tax residents but maintain financial ties to another country. Examples of this could be through:
- Foreign investments
- Pensions
- Rental properties
In many cases, income is declared and taxed – correctly or incorrectly – in the country of origin, and clients mistakenly assume this means their global tax obligations have been fully met. However, most jurisdictions, including the UK, follow a worldwide taxation system.
UK tax residents are required to report all worldwide income and gains to HMRC, even if tax has already been paid elsewhere. This is where many individuals come unstuck – not through deliberate non-compliance, but simply by misunderstanding the rules.
Voluntarily disclosing offshore income to HMRC
With HMRC increasingly leveraging international data-sharing agreements to identify discrepancies, the likelihood of undetected non-compliance is diminishing rapidly.
Failure to report offshore income correctly can result in the following:
- HMRC enquiries
- Interest charges
- Substantial penalties
Fortunately, HMRC provides a route for voluntary disclosure through the Worldwide Disclosure Facility (WDF). Coming forward before HMRC initiates contact can significantly reduce penalties and mitigate reputational risk.
Common pitfalls to watch for
Some of the most common areas of misunderstanding include:
- Taxpayer versus tax resident – You can be a taxpayer in a jurisdiction without being a tax resident.
- Nature of foreign income – Depending on the nature of the foreign income, it may be taxable both in the source country and the country of residence, or solely in the country of residence, as determined by the terms of the applicable double taxation treaty (DTT).
- Double taxation relief – While tax treaties provide relief from double taxation, they do not eliminate reporting obligations.
Planning your returns across borders
Where income is earned in multiple countries, your tax position needs to be planned with care. A structured approach helps avoid omissions and ensures you’re not overpaying or underreporting. Make sure you:
- Establish the sources of foreign income across all relevant jurisdictions.
- Determine which income is reportable exclusively in your country of residence, or in both the source country and country of residence (e.g., rental income).
- Assess the impact of any applicable Double Taxation Agreements (DTAs) on how this income is taxed.
Time limits for HMRC investigations
UK tax legislation sets out clear timeframes within which HMRC can assess unpaid tax and these depend on the taxpayer’s behaviour.
Where errors are considered innocent, HMRC can assess tax going back four years. If the behaviour is classified as careless, this period extends to six years. For deliberate behaviour, HMRC can go back as far as 20 years.
For offshore matters, however, the usual four- and six-year time limits can be replaced by a 12-year rule, even where the non-compliance was not deliberate.
Determining the applicable timeframe can be complex and case-specific, and it can significantly affect the total tax, interest and penalties owed. This highlights the importance of seeking advice when considering a disclosure under the WDF.
How Sable International can help
We help clients take control of their tax position before or after HMRC steps in. Whether supporting a formal disclosure or offering a proactive review of worldwide income and assets, our tax teams bring clarity and expertise to every case.
Our services include:
- Tax residence assessments
- Disclosure submissions through the WDF
- Ongoing UK tax compliance with a cross-border focus
- Strategic planning for multi-jurisdictional tax returns (UK/SA)
Proactively addressing tax obligations, especially those involving offshore interests, is essential to avoiding unexpected penalties and safeguarding your financial position. With the right advice, you can achieve peace of mind and full compliance, even in complex cross-border situations.