PRESS RELEASE
- 93% of investment platforms offer offshore funds but only 55% provide ERI reporting tools for advisers and clients
- Platform support for ERI reporting has improved by just 13% since 2023
- HMRC intensifies focus on overseas income with penalties for incorrect payment of tax as high as 200% of the tax due
New data published today by tax software provider Financial Software Ltd (FSL) and data management solutions provider Raw Knowledge, shows that while nine out of ten platforms (93%) offer offshore funds, only 55% provide tools to help advisers and their clients correctly identify and report Excess Reportable Income (ERI) liabilities. This could leave investors exposed to significant penalties from HMRC.
The gap in support may leave clients exposed to unforeseen tax consequences where offshore funds are held within general investment accounts (GIAs), where ERI must be reported to HMRC. Failure to do so or reporting incorrect information could lead to penalties of up to 200% of the tax due, plus any interest and late payment penalties.
Little progress has been made since FSL first highlighted this issue in its 2023 report, Excess Reportable Income: Borrowed Time. Since then, platform support for ERI reporting has increased by just 13%, despite growing use of offshore fund ranges.
The issue is exacerbated by increased demand for MPS solutions. Data from the lang cat’s latest State of the Advice Nation report shows that 42% of advice firms in the UK are using MPS for all or most of their clients. Reflecting this, Platforum research shows assets under management across platform MPS solutions has nearly quadrupled over the past six years, rising 293%. Separate data from the lang cat shows that almost two-thirds (61%) of MPS ranges on its Analyser software include offshore funds which require ERI reporting if held in a GIA.
ERI is income earned by an offshore fund that is not distributed to investors but is instead retained within the fund. When these funds are held in GIAs, investors may still be liable for tax on that income, despite not directly receiving it. However, knowing the correct amount of tax due can be a challenge as ERI information is often incredibly difficult to source and interpret, with no centralised reporting requirements for investment funds.
HMRC is intensifying its focus on overseas income as it seeks to plug an estimated tax gap (underpaid tax) of around £46.8 billion. The tax authority’s 2024/25 annual report and accounts show it sent around 20,000 letters to taxpayers who may not have declared all their foreign income, contributing over £80m in compliance yield.
Tax reporting capabilities are becoming an important consideration for advisers when assessing platforms. The lang cat’s latest annual State of the Advice Nation report found taxation and legislative uncertainty were causing the biggest change in clients’ expectations and behaviour in 2025. In addition, despite over 30% of advisers reporting an increase in demand for CGT reporting, around one in six (15%) said their platform didn’t accurately reflect their CGT position.
Michael Edwards, managing director at FSL, said: “Platforms have expanded access to offshore funds in recent years, giving investors more choice and more opportunities for growth, but unfortunately the supporting tax reporting infrastructure hasn’t kept up, creating a real Consumer Duty blind spot for advisers.
“In my view, if platforms allow exposure to offshore investments, they should equip advisers with the tools to manage the resulting tax complexity. Anything less leaves clients vulnerable to potentially significant and avoidable penalties from HMRC.”
Preya Patel, managing director at Raw Knowledge, said: “Frustratingly for everyone, ERI data remains fragmented, inconsistent, and difficult to access. There’s no standardised framework for how funds publish this information, meaning even the most experienced advisers can struggle to get complete and reliable figures for their clients.
“From a Consumer Duty perspective, this raises an important question for platforms. You could argue that offering offshore funds to invest in, without being able to satisfy ERI reporting requirements, means that investors are not provided with the support they need to avoid foreseeable harm.”
Greg Moss, Chartered Financial Planner and Founder of Eleven.2 Financial Planning, said: “ERI is one of those areas that sounds technical and niche, but it’s becoming more of an issue and has very real tax consequences for clients who hold offshore reporting funds in GIAs. The problem is that sourcing accurate ERI figures is massively time-consuming – we’re talking about manually cross-referencing fund manager publications, trawling through the HMRC reporting fund list, and hoping the data is current and complete.
“The really annoying thing is the reporting data needed is readily available in some tax packs, so platforms can provide this is they want to. It’s disingenuous for them to suggest advisers can pick up this task without an impact on the end client because it’s infinitely harder for us to do it than a platform, and we are generally far less well-resourced than they are.
“It’s less about this being an annoying task for us, it’s more about poorer service for the end client which they know. Advisers aren’t asking for anything extraordinary. We just need the right tools and support that delivers accurate data that both we and our clients can act on. At the moment, we’re a long way from that.”
ENDS
Notes to editors
For more information contact:
Nicola Cannings, PR Director, the lang cat
nicola@thelangcat.co.uk
M: 0771 366 9899
About FSL
Financial Software Ltd (FSL) provides market-leading solutions and services that simplify the process of tax management, analysis and reporting in the UK, US and Ireland.
Its award-winning capital gains software, CGiX, is trusted by leading members of the wealth and investment community to accurately calculate their clients’ taxable wealth. In addition to CGiX, FSL offers end-to-end tax administration outsourcing services, excess reportable income (ERI) reporting, and tax consultancy and training.
FSL is part of Industrial Thought Ltd Group, a group of businesses specialising in investment taxation, financial data and technology, and related consultancy services.
About Raw Knowledge
Raw Knowledge is a data management firm and specialist financial data provider under the Industrial Thought group of companies.
Its pioneering Managed Smart Data platform helps financial institutions make better, data-driven decisions and streamline their operations by creating a traceable and harmonised view of their disparate data sources. Raw Knowledge also provides complete, verified and structured excess reportable income (ERI) data to help financial services firms and their clients accurately report on offshore investments.