Since 2017, HMRC has been receiving automatic data on the offshore financial accounts of UK residents from more than 100 countries every year. If you have or have had, a foreign bank account, investment account or life insurance policy, HMRC almost certainly has information about it. Understanding exactly what data arrives, how HMRC uses it and what happens when it does not match your UK returns is essential.
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What CRS is
The Common Reporting Standard (CRS) is the OECD’s global standard for the automatic exchange of financial account information between tax authorities. Developed in response to the G20’s push for global tax transparency after the financial crisis, CRS was published in 2014 and adopted by “early adopter” jurisdictions from 2016, with first exchanges to HMRC taking place in 2017.
As of 2026, more than 100 jurisdictions participate in CRS. The UK’s exchange relationships cover practically every significant financial centre in the world. The fundamental principle is simple: foreign financial institutions identify customers who are tax resident in other CRS jurisdictions, collect their tax identification information and report the relevant data to their local tax authority, which then automatically transmits it to the relevant foreign authority, including HMRC, once per year.
The result is that offshore financial secrecy, which had for decades made it difficult for HMRC to know about foreign accounts, has been substantially eliminated for CRS-participating jurisdictions. The era of the undiscoverable Swiss bank account is over.
What information is exchanged
Under CRS, the data transmitted to HMRC for each UK-resident account holder typically includes:
Account balance information
The balance or value of each financial account at the end of the reporting year. For bank accounts, this is the closing balance. For investment accounts, it is the market value of holdings. For life insurance contracts, it is the surrender value.
Income credited to the account
- Interest: gross interest paid or credited during the year
- Dividends: dividends paid or credited, from foreign equities or funds
- Other income: rental income, distributions and other amounts credited to the account
Gross proceeds from asset sales
The gross proceeds from the sale or redemption of financial assets held in the account during the year. Note: this is the gross figure, not the gain. HMRC therefore knows the total proceeds, even if it does not automatically know the base cost.
Account holder identity data
- Full name
- Address
- Date of birth
- Tax identification number (in the UK, typically the National Insurance number or Unique Taxpayer Reference)
- Account number
- Name and identifying number of the reporting financial institution
FATCA: the US equivalent
The United States does not participate in CRS, it operates its own equivalent, the Foreign Account Tax Compliance Act (FATCA). Under the UK–US Intergovernmental Agreement (IGA), US financial institutions report to the US Internal Revenue Service on accounts held by UK tax residents. The IRS then transmits this data to HMRC under the bilateral treaty framework.
The reverse also applies: UK financial institutions report on US persons’ accounts to HMRC, which shares the data with the IRS. This reciprocal exchange means that UK taxpayers with US brokerage accounts, US bank accounts, US retirement accounts (including 401(k) plans and IRAs, subject to treaty treatment) or US-sited assets should assume HMRC has data about those holdings.
FATCA reporting categories differ slightly from CRS in their technical scope, but the practical effect, HMRC receiving data on UK residents’ US accounts, is broadly equivalent.
How HMRC uses CRS data
CRS data does not simply sit in a database, HMRC actively processes it through its Connect system, a sophisticated data analytics platform that cross-references more than 30 billion data points from hundreds of sources.
The matching process works as follows:
- CRS data ingested: HMRC receives the annual data feed from all CRS exchange partners and loads it into Connect.
- Taxpayer identification: Connect matches each data record to a specific UK taxpayer using name, address, date of birth and National Insurance number or UTR.
- Self Assessment cross-reference: Connect then compares the income and proceeds figures from the CRS data against the amounts declared in the matched taxpayer’s most recent Self Assessment return (or prior returns, if the data relates to earlier years).
- Discrepancy flagging: where the CRS data shows income or proceeds that do not appear to be reflected in the Self Assessment return, the case is flagged for compliance action.
- Compliance action: HMRC’s compliance team issues a letter, typically a nudge letter, to the taxpayer, referencing the overseas account and prompting a response.
This process is largely automated, which is why HMRC is able to issue large volumes of offshore nudge letters each year. The automation also means that some letters are issued based on apparent discrepancies that have an innocent explanation (for example, income that was declared but in a slightly different form), which is why it is important to respond rather than ignore the letter.
What triggers a letter
The most common trigger for an HMRC offshore compliance letter is a discrepancy between CRS data and declared income. Specific triggers include:
- Foreign bank account interest not appearing in the foreign pages of a Self Assessment return
- Foreign investment income (dividends, distributions) not declared
- Capital gains proceeds from foreign investment account disposals not reflected in the return
- Account balances significantly larger than income declared would suggest, indicating possible undeclared income or assets
- Trust or entity data , CRS now captures information on passive non-financial entities (passive NFEs) such as holding companies and certain trusts, meaning that offshore corporate or trust structures are increasingly visible to HMRC
Non-CRS jurisdictions
Not every jurisdiction participates in CRS. Some notable examples of non-CRS or late-joining jurisdictions (as of 2026):
- The United States (operates FATCA separately, as described above)
- Some Gulf Cooperation Council states, though the UAE and Bahrain are now CRS participants
- Certain smaller Pacific and Caribbean territories
However, the absence of CRS participation does not mean HMRC has no access to data from these jurisdictions. HMRC has a network of bilateral Tax Information Exchange Agreements (TIEAs) with many non-CRS territories, under which HMRC can make specific requests for information about named individuals. HMRC also has access to data from leaked documents (Panama Papers, Pandora Papers) and from whistleblower disclosures covering historically non-transparent jurisdictions. The fact that a jurisdiction is not in CRS does not mean accounts there are safe from HMRC scrutiny.
Furthermore, accounts held in non-CRS jurisdictions are in Category 2 or Category 3 for offshore penalty purposes, meaning the penalty rates for undisclosed income are higher, not lower, than for CRS-participating countries. See our offshore penalty framework guide for details.
Receiving an offshore disclosure letter
HMRC issues several different types of offshore compliance letter, each with different legal weight and appropriate responses:
- Nudge letter: a non-statutory compliance check. HMRC has data suggesting offshore income or assets. It is prompting voluntary disclosure. There is no legal obligation to respond to a nudge letter, but ignoring it virtually guarantees escalation to a formal enquiry. Respond or make a WDF disclosure within the timeframe given.
- Informal compliance check: a more targeted letter asking for specific information. HMRC is beginning to investigate. At this stage the Worldwide Disclosure Facility remains available if the formal enquiry has not yet been opened. Respond promptly.
- Formal enquiry: an opening letter under s9A TMA 1970 or s12AC TMA 1970. This is a statutory investigation. HMRC has formal powers to require information and documents. The WDF is no longer available for the specific matter being investigated. Specialist representation is essential at this stage.
For a detailed guide to responding to each type of letter, see: HMRC Offshore Nudge Letters: What They Mean and What to Do.
Frequently asked questions
Which countries share data with HMRC?
Over 100 jurisdictions participate in CRS and share data with HMRC, including all EU member states, Switzerland, UAE, Singapore, Hong Kong, Australia, Canada, New Zealand, Jersey, Guernsey, Isle of Man, Cayman Islands and British Virgin Islands. The US operates FATCA separately. The OECD publishes an updated list of activated exchange relationships. For offshore penalty purposes, the territory category (1, 2 or 3) of a jurisdiction depends on the extent of its information exchange with the UK, see our offshore penalty framework guide.
Does CRS cover property as well as bank accounts?
The current CRS framework primarily covers financial accounts, bank accounts, investment accounts, life insurance and annuity contracts and equity interests in certain entities. Direct ownership of overseas real estate is not within the standard CRS data exchange. However, HMRC uses property registers and bilateral agreements to identify undisclosed foreign real estate. The OECD is developing extensions to CRS that may bring more non-financial asset data within automatic exchange in future. See our main guide on offshore assets and HMRC investigations.
What if the data HMRC received is wrong?
CRS data can contain errors, misattributed accounts, incorrect balances or currency conversion issues. If you receive an offshore nudge letter and believe the underlying data is incorrect, respond in writing to HMRC with supporting evidence (bank statements, foreign tax certificates, evidence of prior declaration). Do not ignore the letter. HMRC may escalate to a formal enquiry regardless of whether its data is accurate, and it is always better to engage and correct the record than to allow the matter to escalate.
I have a foreign account that I declared on my tax return. Will I still get a nudge letter?
Possibly, HMRC’s automated matching process is not infallible and apparent discrepancies can arise even where income has been properly declared. If you receive a nudge letter but have declared the relevant income, respond in writing explaining that the income appeared on your return and reference the specific entries. This demonstrates compliance and typically closes the matter without further enquiry. Keeping clear records of how foreign income figures are calculated and where they appear in your returns is strongly advisable.