Offshore Disclosure: What HMRC Sees That the IRS Does Not

An Offshore disclosure built for one tax authority rarely satisfies the other. HMRC is fed by the Common Reporting Standard, which reports balances, gross proceeds and controlling persons with almost no threshold. The IRS is fed by FATCA, which is narrower, threshold-bound and largely one-directional. The gap between those two feeds is where dual filers get caught.

Most guidance on offshore disclosure treats "the tax authority" as a single, omniscient entity. For a US citizen resident in the United Kingdom, that framing is actively misleading. HMRC and the IRS are supplied by two structurally different automatic exchange regimes, built at different times for different purposes, with different jurisdictional triggers, different de minimis floors and materially different definitions of what counts as a reportable financial account. A disclosure package assembled to reconcile one authority's data set will frequently leave the other holding information it cannot match to anything you have filed.

This guide maps that asymmetry precisely. It is not a comparison of disclosure routes — we cover the route choice between delinquent procedures, streamlined filing and voluntary disclosure elsewhere. It is an analysis of what each authority actually holds about you before you write a single word of a disclosure narrative, and what that means for how you sequence and scope the work.

Why offshore disclosure is really two disclosures

A US citizen or green card holder living in London occupies an unusual position in the international transparency architecture. You are simultaneously:

• A UK tax resident whose non-UK accounts are reported to HMRC by financial institutions in more than 100 CRS-participating jurisdictions.
• A US person whose UK and other non-US accounts are reported to the IRS, via HMRC and equivalent competent authorities, under the FATCA intergovernmental agreement network.
• A person whose US-situs accounts are subject to a reciprocal reporting obligation from the United States that is far narrower than what the US receives in return.

Each of those three flows has a different scope. The practical consequence is that a correction which closes the gap in one authority's file can, if scoped wrongly, open or widen the gap in the other's. Worse, an inconsistency between a UK disclosure and a US filing is itself a risk indicator — both authorities exchange information on request under the US-UK double tax treaty and the Convention on Mutual Administrative Assistance in Tax Matters, quite apart from the automatic feeds.

What is the actual difference between what HMRC receives and what the IRS receives?

The two regimes look superficially similar. FATCA came first, in 2010; the OECD explicitly modelled the Common Reporting Standard on it. But the design choices diverge in ways that matter enormously to a high-net-worth dual filer.

CRS: breadth without a floor

CRS is multilateral and residence-based. A financial institution in Switzerland, Singapore, Jersey, the UAE or any other participating jurisdiction identifies account holders who are tax resident in the UK and reports them to its own tax authority, which passes the data to HMRC. Critically, CRS was designed without the de minimis exclusions that FATCA carries for individual accounts. There is no CRS analogue to FATCA's $50,000 individual account exclusion. New individual accounts are reportable from the first pound.

The data set is also wide. CRS reports include account balance or value at the end of the reporting period, gross interest, gross dividends, other income generated by assets held in the account, and — the item most often overlooked — gross proceeds from the sale or redemption of financial assets. That last field means HMRC can see the full disposal volume in an offshore brokerage account, not merely the income it threw off.

FATCA: depth on US persons, but only where the IGA reaches

FATCA is bilateral and citizenship-based. It asks non-US financial institutions to identify US persons using US indicia — US place of birth, US address, US telephone number, standing instructions to a US account, and so on — and report them. Under the UK's Model 1 intergovernmental agreement, UK institutions report to HMRC, which transmits to the IRS.

But FATCA carries thresholds that CRS does not. Pre-existing individual depository accounts below $50,000 may be excluded from review and reporting. Cash value insurance and annuity contracts below $250,000 held at the relevant determination date may be excluded. Pre-existing entity accounts below $250,000 may be excluded. Each of those carve-outs creates a category of account that HMRC may see under CRS from another jurisdiction but which the IRS may never receive under FATCA.

The reciprocity gap

The most consequential asymmetry runs the other way. The United States is not a CRS participant. It has never adopted the standard, relying instead on its FATCA IGA network. Under the "reciprocal" Model 1 IGAs, the US does report some information back — but that reporting is materially thinner than what it receives. It covers, broadly, interest on US depository accounts held by non-resident individuals and certain categories of US-source income paid to non-residents. It does not extend to account balances, gross proceeds, or the controlling persons behind entity accounts.

For a UK-resident American with US brokerage, retirement or trust interests, this produces an important and under-appreciated result: the IRS knows a great deal about your UK financial life, while HMRC's automatic visibility into your US financial life is comparatively narrow. That is not a reason to under-disclose in the UK. Article 27 of the US-UK treaty permits exchange on request, HMRC's Connect analytics build pictures from many non-CRS sources, and the UK's assessment windows for offshore matters run long. But it does explain why so many disclosures are mis-scoped in one direction.

CRS versus FATCA: the asymmetry at a glance

Feature	CRS (feeds HMRC)	FATCA (feeds the IRS)
Legal architecture	Multilateral OECD standard, 100+ jurisdictions	Bilateral US statute plus IGA network
Jurisdictional trigger	Tax residence	US citizenship, green card, or US indicia
Individual account de minimis	None for individual accounts	Pre-existing depository accounts under $50,000 may be excluded
Cash value insurance	No de minimis exclusion	Pre-existing contracts under $250,000 may be excluded
Entity accounts	Reportable; controlling persons look-through applied broadly	Pre-existing entity accounts under $250,000 may be excluded
Gross proceeds reported	Yes — sale and redemption proceeds	Yes for custodial accounts, subject to IGA phasing
Account balance reported	Yes, year-end or closure value	Yes, subject to thresholds
Reciprocity	Fully reciprocal between participants	Limited: US sends far less than it receives
Withholding sanction	None	30% withholding on certain US-source payments
US participation	Not a participating jurisdiction	Originating jurisdiction

HMRC's own overview of the automatic exchange framework is published at gov.uk's automatic exchange of information guidance, and it confirms the two-track structure: UK institutions report on US customers under FATCA, and separately report non-UK residents under CRS while receiving CRS data on UK residents from abroad.

What does HMRC see that the IRS does not?

In practice, the following categories routinely sit in HMRC's file without a matching entry in the IRS's:

• Small and dormant offshore accounts. A €12,000 legacy account in Ireland or a dormant Jersey deposit falls below FATCA's pre-existing individual threshold but is fully reportable to HMRC under CRS. This is a persistent source of nudge letters.
• Accounts in jurisdictions with weaker US indicia capture. Where a US connection was never flagged — because the account predates FATCA onboarding, the passport on file is British, and there is no US address or telephone number — the institution reports the account to HMRC as a UK resident's, and never identifies it as US reportable.
• Gross disposal proceeds from offshore portfolios. CRS reports gross proceeds. Where an account holder has been trading, HMRC can see turnover that bears no relation to declared gains, which is precisely the mismatch that triggers a one-to-many campaign.
• Controlling person data on offshore structures. CRS applies a look-through to passive non-financial entities and reports the controlling persons. The scope of entities caught, and the persons reported, is generally broader than the equivalent FATCA analysis.
• Cash value insurance and offshore bonds. Portfolio bonds and unit-linked policies below FATCA's insurance carve-out are still CRS reportable.
• Non-US, non-UK residence history. Because CRS is residence-driven, HMRC receives data keyed to your UK residence for every year you were UK resident, including years you may not have considered relevant to a US filing.

What does the IRS see that HMRC does not?

The reverse list is shorter but sharper, and it is what makes a US-side correction unavoidable rather than optional:

• Your UK accounts, identified as yours by name and US TIN. Every UK bank, building society, investment platform and insurer that has classified you as a US person has been reporting you to HMRC for onward transmission to the IRS.
• ISAs, general investment accounts and platform holdings. An ISA is invisible to HMRC as a tax matter — it is exempt — but it is a reportable financial account for FATCA. The IRS therefore receives data about an account you have never mentioned on a US return, and about which HMRC has no reason to ask you anything at all.
• UK workplace and personal pension arrangements, depending on classification. Certain UK pension schemes are treated as exempt beneficial owners or deemed-compliant, and others are not; the treatment is not uniform.
• Account closure events. A closed or transferred account is reportable for the year of closure, so the historic footprint does not disappear when the account does.

This is why the classic pattern — "I have always filed with HMRC, so I am fine" — fails. UK compliance is genuinely irrelevant to the US data set. The IRS is looking at a feed that has nothing to do with your Self Assessment return, and the absence of a US return against a live FATCA report is the single clearest signal available to it.

Where the asymmetry actually bites: three worked patterns

Pattern one: the accidental American with a Jersey deposit

Born in Boston, moved to the UK at four, British passport, no US filing history. A £30,000 Jersey deposit account opened in 2011 with a British passport. Jersey reports to HMRC under CRS from 2017 onwards, keyed to UK residence — HMRC sees it in full. Jersey never identified a US person, so the account has never appeared in a FATCA report. Meanwhile a UK current account opened in 2019 with a US place of birth on file is FATCA reported to the IRS. The result: two authorities, two entirely different pictures, and neither picture is complete. A disclosure that addresses only the Jersey account leaves the US exposure untouched; a streamlined filing that addresses only the FATCA-reported accounts leaves an unexplained CRS entry with HMRC.

Pattern two: the executive with an offshore portfolio bond

A £900,000 unit-linked offshore bond written pre-2014. Under FATCA's cash value insurance analysis the contract may have been excluded from pre-existing account review; under CRS it is unambiguously reportable, and HMRC receives the surrender value. On the US side the bond raises passive foreign investment company and, potentially, section 7702 questions that have never been addressed. HMRC sees an asset it has not been told about; the IRS sees nothing at all but has a latent, compounding liability. The disclosure has to be built from the asset outward, not from either authority's data feed.

Pattern three: the founder with a passive holding company

A BVI or Cayman holding vehicle classified as a passive non-financial entity. CRS look-through reports the controlling persons — including the founder — to HMRC. FATCA's entity account threshold and classification analysis may have produced a different, narrower outcome. Simultaneously the entity is almost certainly a controlled foreign corporation for US purposes, engaging Form 5471, GILTI and subpart F obligations that were never filed. The information return failure alone can hold the US statute of limitations open on the entire return.

How do you build a disclosure that answers both authorities?

The sequencing matters. At Jungle Tax we work from the asset register outward rather than from either authority's data feed, precisely because neither feed is complete. The order below is the one we use for high-net-worth dual filers.

• Step one — build the true account register. Every account, in every jurisdiction, for the full lookback period, including closed and transferred accounts. Not the accounts you think were reported; all of them. Institutions will provide historic statements, and closure-year reporting means the paper trail exists even for accounts shut a decade ago.
• Step two — classify each account under both regimes. For each account and each year, determine whether it was CRS reportable to HMRC, FATCA reportable to the IRS, both, or neither. This produces the asymmetry map and tells you what each authority is likely holding.
• Step three — determine the substantive tax position separately in each jurisdiction. UK taxability and US taxability diverge sharply: ISAs, spread betting accounts, offshore bonds, accumulation units, and UK pensions are all treated differently. An account can be entirely tax-free in the UK and generate substantial US liability, or vice versa.
• Step four — fix the lookback periods. The two regimes use different windows. The UK's assessment time limits for offshore matters run substantially longer than the domestic default; the US streamlined procedures use a defined three-year return and six-year FBAR lookback, while unfiled international information returns can leave the US statute open indefinitely.
• Step five — align the narratives. The US non-willfulness certification and any UK disclosure narrative must tell the same factual story. Two inconsistent accounts of the same history, held by two authorities that can exchange information on request, is an avoidable and serious risk.
• Step six — sequence the filings. Which goes first depends on the facts: whether a nudge letter has landed, whether an enquiry is open, whether the US position is non-willful, and whether currency or credit interactions make one order materially cheaper.

Does an IRS streamlined filing put you right with HMRC?

No. They are wholly separate regimes with separate legal bases. The IRS Streamlined Filing Compliance Procedures resolve US federal income tax and FBAR exposure for taxpayers who can certify that their failure to file was non-willful — typically three years of returns and six years of FBARs. They confer no protection whatsoever in the United Kingdom.

Conversely, a completed disclosure under HMRC's Worldwide Disclosure Facility — notification through the Digital Disclosure Service followed by a 90-day window to complete — resolves UK liabilities only. It does not touch Form 8938, the FBAR, Form 5471, Form 3520 or Form 8621. Nor does it give any comfort on the US side; if anything, a UK disclosure creates a documented, dated record of when you became aware of the issue, which is directly relevant to any subsequent US non-willfulness certification.

Penalties: two regimes, two clocks

The penalty architectures are as asymmetric as the data feeds.

On the UK side, offshore penalties are graduated by the territory in which the asset or income sits and by behaviour, rising steeply for deliberate conduct in less transparent jurisdictions. The Failure to Correct regime, which bit after the Requirement to Correct window closed on 30 September 2018, carries a standard penalty set at a high multiple of the tax at stake with limited mitigation, plus a possible asset-based charge where the tax at stake is substantial and the behaviour deliberate. Assessment windows for offshore matters extend well beyond the ordinary domestic limits.

On the US side, the FBAR is the pressure point. The filing threshold is an aggregate $10,000 across all foreign accounts at any point in the year, as set out on the IRS's FBAR guidance page, and penalties are assessed per report for non-willful failures and at a percentage of account balances for willful ones. Form 8938 failures carry their own penalty plus continuation charges, and — the point most often missed — an unfiled international information return can suspend the statute of limitations on the entire return until three years after the form is eventually filed. You can model exposure with our FBAR penalty calculator before deciding on a route.

What should you do if a nudge letter arrives?

HMRC's one-to-many campaigns are generated from CRS data matched against declared income using the Connect system. A nudge letter tells you something specific: HMRC holds a data item it cannot reconcile with your return. It does not tell you which item, and it does not by itself mean tax is due — a fully declared account, a genuinely exempt receipt, or a remittance-basis position may all explain the mismatch.

What it does mean is that the clock has started, and that any subsequent disclosure will be treated as prompted rather than unprompted, with materially worse penalty mitigation. For a US person, it also means something the letter never mentions: the same underlying account is very likely sitting in a FATCA report to the IRS, or ought to have been, and responding to HMRC without addressing the US position is a half-solution that documents your awareness.

Common mistakes we see in dual-filer disclosures

• Scoping the US disclosure to the FATCA-reported accounts. The IRS feed is incomplete. Your US filing obligation is not limited to what was reported.
• Assuming ISAs and premium bonds are out of scope. UK tax exemption has no US analogue. ISAs are FBAR and often Form 8938 reportable, and their underlying funds are frequently PFICs.
• Ignoring closed accounts. Closure-year CRS and FATCA reporting means historic accounts remain visible. Omitting them undermines the credibility of the whole submission.
• Treating gross proceeds as income. A CRS gross proceeds figure is not a gain. Disclosures that concede tax on turnover rather than computing the actual position overpay substantially.
• Inconsistent narratives. A UK disclosure describing a long-known account and a US certification describing recent discovery is a serious problem.
• Filing in the wrong order. Sequencing affects foreign tax credit positions, interest accrual and, in some cases, eligibility.

The 2026 direction of travel

The asymmetry is narrowing in some places and widening in others. The Crypto-Asset Reporting Framework brings digital asset platforms into automatic exchange, with UK regulations applying to data collected from 2026 and first exchanges following in 2027 — extending HMRC's visibility into an asset class that has largely sat outside CRS. The US has pursued its own domestic broker reporting regime on a separate track and timetable. Meanwhile pressure on the US to close the reciprocity gap has produced little movement. For dual filers, the practical implication is that both feeds are getting denser, and the window in which an unprompted disclosure remains available is closing.

How Jungle Tax approaches offshore disclosure for dual filers

We prepare returns and disclosures; we do not sell structures. For a US-connected client with UK and third-country accounts, that means reconstructing the complete account register, mapping each account against both reporting regimes year by year, computing the substantive position under both codes, and then building a single coherent factual narrative that both authorities can accept. Where the position is genuinely non-willful, we assemble the evidence pack that supports it. Where it is not, we say so and route the work accordingly. Our cross-border return preparation team handles UK and US filings in the same workflow, which is the only reliable way to keep the two stories aligned.

If you have received a nudge letter, hold offshore accounts that have never appeared on a US return, or simply want to know what each authority is likely holding before you decide anything, contact our cross-border team for a confidential, privileged-first consultation. We will map your exposure under both regimes and set out the routes available — before either authority sets the timetable for you.