Tax Controversy
Form 1116, Form 8833, Treaty, SA100
Examinations, appeals and disputes with the IRS or HMRC over cross-border positions, including treaty claims and double taxation cases.
What does Tax Controversy involve?
When the IRS or HMRC challenges a cross-border position, the dispute often turns on how the other country treated the same item. Examinations of foreign tax credits, treaty claims and information returns need both returns and the reasoning behind them. We handle the dispute from the first information request through to appeal.
Forms and filings involved
- Form 1116
The form that turns UK income tax into a credit against US tax on the same income, with carryovers for unused amounts.
- Form 8833
The disclosure required when a US return relies on the US-UK treaty to override or modify the ordinary US tax rules.
- Treaty
How the US-UK income tax treaty allocates taxing rights, and where its saving clause limits what US citizens can claim.
- SA100
The main UK Self Assessment return, with supplementary pages for foreign income, property, gains and residence.
- SA109
The Self Assessment pages for residence status, split-year treatment, treaty residence claims and foreign income and gains claims.
When a tax authority challenges your position
An IRS examination of an international position usually begins with an information document request asking for the evidence behind the return: UK payslips and tax calculations, pension statements, company accounts or trust records.
The quality of the first response shapes the rest of the examination. We assemble the UK evidence, explain in writing how each figure reached the US return, and deal with the examiner's follow-up questions directly so that the record is complete.
If an examination ends in disagreement, the IRS Independent Office of Appeals offers a review by staff separate from the examiner. A notice of deficiency opens a strict window to petition the Tax Court without paying the tax first, and the window is longer for notices addressed to someone outside the United States. The deadline cannot be extended, so the date on the notice matters more than the date it arrives. FBAR penalties follow a separate process outside the Tax Court.
HMRC disputes follow a different route. An enquiry into a Self Assessment return ends with a closure notice, and the taxpayer can then ask for a statutory review or appeal to the First-tier Tribunal. Where both countries tax the same income and neither accepts the other's position, the treaty's mutual agreement procedure lets the two competent authorities negotiate. Undisclosed offshore income, including US income, can be regularised through HMRC's Worldwide Disclosure Facility.
Disputes we handle
- 01
- IRS examinations of foreign tax credits, treaty claims and information returns
- 02
- Cases taken to the IRS Independent Office of Appeals
- 03
- HMRC enquiries into residence, foreign income and treaty claims
- 04
- Statutory reviews and appeals to the First-tier Tribunal
- 05
- Mutual agreement procedure requests where both countries tax the same income
Who this is for
Individuals whose treaty or foreign tax credit claims are under examination
- Companies facing IRS or HMRC enquiries into intercompany charges
- Taxpayers holding a notice of deficiency with a Tax Court deadline
- UK residents with US income that HMRC says was never reported
Why US UK Tax Returns
Each return is prepared with the other country's return open beside it, so a credit, election or disclosure on one is supported by the other.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
The IRS has disallowed my foreign tax credits. What can I do?
First find out why. Disallowances usually rest on missing proof of UK tax paid, credits placed in the wrong category, or a mismatch between the UK and US tax years. Many are resolved by providing HMRC calculations and evidence of payment with a clear reconciliation. If the examiner will not accept the evidence, the case can go to the Independent Office of Appeals, and later to the Tax Court if a notice of deficiency is issued.
Both HMRC and the IRS say they have the right to tax the same income. Who wins?
The treaty answers most of these conflicts through its rules on residence, source and credit. Where the two authorities still disagree, a taxpayer can ask the competent authorities to resolve the case under the mutual agreement procedure. The process is slow, and the treaty does not guarantee that they will reach agreement. Meanwhile, domestic appeal deadlines in each country usually need to be protected separately.
HMRC has opened an enquiry into my residence status. Does that affect my US return?
It can. If HMRC concludes you were UK resident when your return said otherwise, extra UK tax will follow, and some of it may be creditable on your US return through an amendment. If your US return relied on UK residence under the treaty, the outcome may also change which country has the primary right to tax. The two positions should be consistent, so we look at both before responding to HMRC.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
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Tell us where you live, what you hold and which years are outstanding. We will say what applies and what it involves before any work begins.
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