HMRC nudge letters: tax risks after moving to Dubai

The new HMRC letters

On 22 October 2026, Spear’s reported that several clients of the accountancy firm Buzzacott had received HMRC letters about overseas income and gains with something new attached: a schedule of the offshore data HMRC holds on them. The schedule names the financial institution that supplied the data, describes the amount reported and gives the year it relates to.

Justin Stevenson, a tax investigations director at Buzzacott, said it was the first time he had seen HMRC include specific data, and its source, in letters of this kind. He also said it was too early to know whether every letter will now include it (Buzzacott).

Picture a schedule that reads “Bank X, 2023, £240,000” while your tax return shows no UK tax due. Your return may be completely right. HMRC will still want to know why the two don’t match.

What is an HMRC nudge letter?

A nudge letter is HMRC’s way of saying “we think you should check this”. For years HMRC has sent them to people it believes may not have declared all their overseas income, gains or assets. The letters point people to the Worldwide Disclosure Facility, HMRC’s online route for correcting tax owed on offshore matters.

What’s new is the detail. A letter that used to say “we may know something” can now say “here is what we know, and who told us”. The new letters also ask people to check all their UK tax, not just the items on the list.

That’s a welcome step towards transparency. It’s also a clear sign that HMRC is matching data, and expects you to be able to do the same.

Does HMRC get data from UAE banks?

Yes. Under the OECD’s Common Reporting Standard (CRS), banks and investment firms around the world automatically report account details to their own tax authority, which passes them on to the country where the account holder is tax resident. HMRC says more than 100 countries have committed to exchange information this way.

The UAE is one of them. Its first exchanges took place from September 2018, according to the UAE Ministry of Finance. The UAE is on HMRC’s list of countries that send data to the UK.

The reports cover balances, interest, dividends and sale proceeds.

One point matters more than any other: the data follows where your bank thinks you live, not what your tax return says. That depends on what you told the bank when you opened the account, and whether you’ve updated it since.

Why people moving from the UK to Dubai are most exposed

A move creates several points where your records can drift apart without anyone doing anything wrong.

1. Your bank still thinks you live in the UK. An account opened while you lived in London, Jersey or Guernsey may still list you as UK resident years after you moved to Dubai. The bank keeps reporting you to HMRC.
2. The year you leave. Under split-year treatment, the year you leave can be divided in two: UK-taxed before you go, and generally not UK-taxed after. CRS reports cover a calendar year (January to December), not the UK tax year (6 April to 5 April). So the figures will rarely match at first glance.
3. Gross figures against taxable figures. CRS reports gross amounts, such as total sale proceeds. Your tax return shows the gain, or no UK tax at all if you weren’t UK resident. Both can be right and still look nothing alike.
4. Returning within five years. If you return to the UK within five years, the temporary non-residence rules can bring certain income and gains made while you were in Dubai back into UK tax. For founders this can include gains on assets you owned before you left. A sale that looks tax-free when you make it may not stay that way.

None of this involves hiding anything. But the job of explaining a mismatch falls on you, and you need evidence.

What this could look like: an illustrated example

Here’s an illustrated example of what this could look like for a founder who has done everything right. The person and figures are hypothetical, but the situation is a common one.

Imagine a founder who moves to Dubai in 2022. Their UK residence ends under the statutory residence test, split-year treatment applies in the year they leave, and every return is filed correctly and on time.

Say they keep an investment account with a Channel Islands bank they have used for years. When they sell a portfolio there in 2023, the bank still has their old London address and UK residence on file. It reports gross sale proceeds of about £240,000 to HMRC. Because they are no longer UK resident, no UK tax is due on the sale, provided they stay non-resident for more than five years.

Now suppose a routine review spots the mismatch before any letter arrives. The fix would take four steps:

• updating the bank’s residence form (its “self-certification”)
• getting a UAE tax residence certificate
• confirming how the five-year rule applies
• writing a one-page note explaining why the sale wasn’t taxable in the UK

If an HMRC letter then arrives months later, the reply takes a day, not weeks. Without that file, the same founder could face months of letters, professional fees and the stress of proving a negative, all because of a bank’s out-of-date records.

How far back can HMRC go?

Further than most people expect.

• Normal limit: 4 years.
• Careless errors: 6 years.
• Offshore income and gains, 2015-16 onwards: 12 years, even if you took reasonable care (HMRC CH53510).
• 2014-15: also open until 5 April 2027 where there was carelessness (HMRC CH53560).
• Deliberate errors: 20 years.

The 12-year limit doesn’t apply if HMRC received overseas data, such as CRS reports, that should reasonably have let it spot and assess the tax within the normal time limits. But HMRC’s own guidance gives an example where it received some data that wasn’t enough to spot the full loss, and the 12-year limit still applied (HMRC CH53550). In plain terms, a partial match doesn’t protect you.

What are the penalties?

Offshore penalties can be much higher than penalties for UK-only errors. Depending on the country involved and how serious the error was, they can reach 200% of the unpaid tax. Further penalties are possible where assets were moved to avoid detection (HMRC CC/FS17).

Penalties are generally lower for people who come forward voluntarily, before HMRC contacts them, and who disclose fully and cooperate.

Inheritance tax if you leave the UK

There’s one more reason to keep UK-era records in order. Since 6 April 2025, inheritance tax has been based on long-term UK residence rather than domicile. If you lived in the UK for at least 10 of the last 20 years, you can stay within UK inheritance tax on your worldwide assets for between 3 and 10 years after you leave, depending on how long you lived in the UK (GOV.UK; HMRC IHTM47020).

A five-step check for UK leavers

There’s no need to panic, and no reason to disclose anything you don’t need to. The sensible step is a calm reconciliation before any letter arrives.

1. List every account and investment outside the country where you’re now tax resident, including dormant accounts and anything held through a company or trust.
2. Check the residence each bank has on file, and update it where it’s wrong.
3. Get your UAE tax residence certificate and keep evidence of your UK departure date.
4. For each year since you moved, note what each account would have reported and how that matches your return, or why it didn’t need to appear.
5. Keep the file. If a letter arrives, your answer is already written.

If you’re fully compliant, this is a few hours’ work and a file you may never need to open. If you find a gap, it’s the difference between a voluntary disclosure on your terms and an enquiry on HMRC’s.

The bottom line

People moving across borders tend to think about tax in terms of rates and residence. More and more, it’s also about records. Tax authorities now see much of what you see. The people who sleep well aren’t those with the least to report. They’re those whose paperwork tells the same story as the data.

That isn’t a reason to worry. It’s a reason to keep your file in order.

Related reading: Would you move countries to pay less tax?, inheritance tax planning and our founders and exit planning service.