Can I use Streamlined Foreign Offshore if I spent over 35 days in the US last year?

Yes, if another year qualifies. The non-residency test only needs one of the three most recent tax years whose return due date has passed, with no US abode and at least 330 full days outside the United States. Any day you are in the US for part of the day is not a full day outside it, so travel days count against you. A heavy-travel year can fail while an earlier year still qualifies.

Is there a penalty under the Streamlined Foreign Offshore Procedures?

No. Taxpayers who meet the foreign version's requirements are not subject to failure-to-file, failure-to-pay, accuracy-related, information return or FBAR penalties for the covered years. You still pay the full tax and statutory interest due on the late or amended returns with the submission. The miscellaneous offshore penalty applies only to the domestic version of the Streamlined procedures, not the foreign one.

Does HMRC need to know I am filing late US returns?

There is no general UK requirement to notify HMRC that you are catching up with the IRS. However, if the US taxes income earned on US workdays, you may be entitled to UK relief for that US tax, which can mean revisiting UK Self Assessment returns that are still open. LLP members should also check how HMRC's salaried members rules apply, because UK employee or self-employed status affects the US return figures.

Should a London consultant claim the FEIE or the foreign tax credit?

At partner, director or principal income levels the foreign tax credit usually works better, because UK tax on UK-source pay generally exceeds the US tax on it and the exclusion is capped. You cannot claim a credit on income you exclude. The exclusion can still help in lower-income years, and late returns can usually still elect it, but revoking it later bars a fresh election for several years without IRS consent.

How are deferred bonus shares from a UK consultancy taxed in the US?

Deferred share awards subject to continued service are generally taxed in the US when they vest and are delivered, mirroring the usual UK PAYE timing, but each plan needs checking. The income is sourced by looking back to where the work was done over the service period, so US client-site workdays create a US-source slice that the foreign tax credit cannot shelter on the US return.

Streamlined Foreign Offshore for US Consultants in London

Q: Do I report my UK workplace pension and ISA on the FBAR?

An ISA held at a UK provider is a foreign financial account and belongs on the FBAR once your aggregate foreign balances exceed 10,000 US dollars at any time in the year. The IRS FBAR exceptions are framed around US retirement arrangements, so a UK pension in which you have a financial interest should be reviewed for reporting; the conservative approach is to include it. Both may also be reportable on Form 8938.

The IRS Streamlined Foreign Offshore Procedure (SFOP) is the penalty-free route back into US compliance for a US citizen or green-card holder living in London who has missed US returns and FBARs through non-willful conduct, and most London-based management consultants can use it, provided at least one of the last three tax years passes the IRS non-residency test. That test has two limbs: you must not have had a US abode, and you must have been physically outside the United States for at least 330 full days in that year. For partners, directors and principals who spend weeks on US client sites, the day count is where eligibility is won or lost, so it has to be rebuilt from travel records before anything is filed.

In the returns we prepare for London consultants, income arrives as salary, cash bonus, deferred share awards and sometimes an LLP profit share, and the US travel calendar is heavier than in almost any other profession. This guide takes each feature in the order a submission must deal with it.

What is the IRS Streamlined Foreign Offshore Procedure (SFOP) and who is it for?

The Streamlined Foreign Offshore Procedure is an IRS programme for US individuals resident outside the United States who failed to report foreign income, pay the related tax or file FBARs, where that failure was non-willful. The IRS defines non-willful conduct as conduct due to negligence, inadvertence or mistake, or conduct resulting from a good faith misunderstanding of the law. The programme terms are set out on the IRS page for US taxpayers residing outside the United States at https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states.

The core attraction for a high earner is the penalty position. Taxpayers who comply with the foreign version are not subject to failure-to-file, failure-to-pay or accuracy-related penalties, or to information return and FBAR penalties, for the covered years. Unlike the domestic version of the Streamlined procedures, the foreign version carries no miscellaneous offshore penalty at all. You pay the full tax and statutory interest due, with the submission. The returns can still be examined, and penalties return only if an examination finds fraud or a willful FBAR violation.

Eligibility comes down to three conditions:

Non-residency: for US citizens and green-card holders, at least one of the three most recent years for which the return due date has passed must be a year with no US abode and at least 330 full days physically outside the United States. For joint filers, both spouses must meet the applicable non-residency requirement.
Non-willful conduct: you must be able to certify, under penalties of perjury on Form 14653, that the failures were non-willful, with the specific facts that explain them.
No current examination or investigation: a taxpayer already under IRS civil examination or criminal investigation cannot use the procedures for the affected years.

Do frequent US client-site trips break the 330-day non-residency test?

Not necessarily, because the test only has to be met in one of the three years. The IRS wording is that a US citizen or lawful permanent resident meets the non-residency requirement if, in any one or more of the most recent three years for which the US return due date (or properly extended due date) has passed, the individual did not have a US abode and was physically outside the United States for at least 330 full days. A consultant who fails the count in two years because of a long US engagement can still qualify through the third.

The danger is that consultants consistently underestimate their US days. A full day means a full 24-hour period, so any day on which you set foot in the United States, including the day you land and the day you fly home, is not a full day outside it. A two-week client visit typically costs fifteen or sixteen days, not fourteen. In a 365-day year, once your US-touching days exceed 35, the year fails; in a leap year the margin is 36. Four or five transatlantic trips with a weekend added on either side will exhaust that margin quickly.

We rebuild day counts from primary evidence, not memory: time-entry records showing client location, expense claims, airline and hotel histories and calendar exports, kept on file in case eligibility is questioned. If all three years fail, the foreign version is unavailable and the penalty-bearing domestic version becomes the comparison point.

What counts as a US abode for a London consultant?

The 330-day count is necessary but not sufficient: the qualifying year also needs no US abode. The IRS points to Publication 54 for the meaning of abode, and its foreign earned income exclusion guidance at https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-tax-home-in-foreign-country gives the working concept. Your abode is not necessarily in the United States merely because you maintain a dwelling there, and it is not necessarily in the United States while you are only temporarily present. The Streamlined page says the same: neither temporary presence nor maintenance of a dwelling in the United States necessarily means the abode is there.

In practice, abode looks at where your economic, family and personal ties are centred. A principal who lives in London with a spouse and children at London schools, keeps a UK GP, pays UK council tax and works from a London office has a strong UK abode even if she owns a let condo in Boston. The harder fact patterns are long US engagements: a consultant seconded to a New York client for most of a year, living in corporate housing with a family who joined them, may have shifted their abode for that period.

The same guidance treats an assignment expected to last one year or less as generally temporary, so a London-based consultant on a nine-month US engagement is usually only temporarily away from a London base.

How do the SFOP 330-day test and the FEIE physical presence test differ?

They look similar but are not interchangeable, and confusing them is a common error in self-prepared submissions. The foreign earned income exclusion physical presence test, described at https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-physical-presence-test, requires presence in a foreign country or countries for 330 full days during any period of 12 consecutive months. The Streamlined non-residency test asks whether you were outside the United States for at least 330 full days in a given tax year, alongside the separate no-abode condition.

Window: the FEIE test uses any rolling 12-month period, which can straddle two calendar years; the Streamlined test is applied to the tax year in question.
Location: the FEIE test counts days in a foreign country, and time on or over international waters does not count; the Streamlined test is framed as days physically outside the United States.
Abode: the FEIE physical presence test does not depend on abode, although the FEIE also requires a foreign tax home, which you cannot have while your abode is in the United States; the Streamlined test has the abode condition built in.

A year can pass one test and fail the other, so run both calculations separately from the same day-count schedule.

Which years must a London consultant file under Streamlined Foreign Offshore?

The covered tax return period is the three most recent tax years for which the US return due date, or properly applied-for extended due date, has passed. The covered FBAR period is the six most recent years for which the FBAR due date has passed. The FBAR is due on 15 April following the calendar year, with an automatic extension to 15 October that needs no request, as the IRS FBAR page at https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar confirms. Because the windows roll forward, we fix the years on the day the package is finalised.

For each covered tax year you file a Form 1040 if no return was filed, or a Form 1040-X if one was, together with every required information return, such as Form 8938 for specified foreign financial assets or Form 5471 where a reportable interest in a foreign corporation exists. Each is marked Streamlined Foreign Offshore in red at the top of the first page and mailed on paper to the dedicated IRS address. The late FBARs are filed electronically through FinCEN's BSA E-Filing System, selecting Other as the reason for late filing and entering Streamlined Filing Compliance Procedures in the explanation box.

How are deferred and long-term bonus awards reported on late returns?

Deferred compensation is the area where consultant returns most often go wrong, because the UK and US timing rules can diverge and because the sourcing of the income looks back to the years the work was done. A typical senior package includes a cash bonus paid some months after the performance year, a deferred element delivered in shares or cash over several years, and at partner level sometimes a long-term award tied to firm performance.

Timing: a cash bonus is generally US income when paid. Deferred share awards subject to continued service are generally taxed when they vest and are delivered, but read each plan, because good-leaver and retirement terms can change that.
Sourcing: pay for services is generally sourced to where the work was performed, so a bonus for 2024 performance is apportioned by 2024 US and non-US workdays, and a deferred award looks back across its service period.
Exclusion timing: the foreign earned income exclusion attaches to the year the income was earned, and Publication 54 has specific rules for pay received later, so deferred amounts can fall outside it.
UK alignment: the same award is usually taxed through PAYE at vesting, so we reconcile each vesting event across both systems before building Form 1116.

The US-source slice is the part that matters most. Income earned on US workdays is US-source, so a foreign tax credit cannot shelter it in the US, and the foreign earned income exclusion does not apply to it either. Under the US-UK income tax treaty, the US taxes that slice first and the UK is generally expected to give relief for the US tax. For a consultant who has never filed, that can mean real US tax on the US-workday portion and a corresponding UK credit claim, which may require amending UK Self Assessment positions that are still open.

Partner or employee: how does UK LLP status change the US filing?

Directors and principals are often PAYE employees; partners may be members of a UK limited liability partnership, sharing profits and contributing capital. The US filing changes materially depending on which you are.

On the UK side, an LLP member is generally taxed as self-employed on a profit share, but HMRC's salaried members rules can treat a member as an employee for income tax and National Insurance where conditions about disguised salary, lack of significant influence and a low capital contribution are all met. A newly made-up partner on a largely fixed draw is the classic case to check.

On the US side, the starting point is how the LLP itself is classified. Under the US entity classification rules, a foreign entity whose members all have limited liability can default to corporate treatment unless an election has been made for partnership treatment. Get the firm's US classification confirmed in writing.If the LLP is treated as a partnership for US purposes, your profit share is your distributive share of partnership income, generally earned income to the extent it reflects your services, and you need to check whether any Form 8865 filing category applies to your interest. A small percentage holder in a large partnership often falls outside the ownership-based categories, but this is a test to run, not assume. If the LLP were treated as a corporation, the analysis turns instead to whether Form 5471 thresholds are met and how distributions are characterised.

Self-employment status brings a further US question: whether US self-employment tax applies to the partner's earnings. The US-UK social security agreement is designed to prevent double social security coverage, and a UK certificate of coverage is the evidence normally used to support an exemption from US self-employment tax for someone covered by the UK system. If no certificate was obtained for the missed years, we raise it as part of the catch-up work.

What happens to a UK employer pension on the US side?

The US does not automatically treat a UK workplace scheme like a US qualified plan. The US-UK treaty contains pension provisions that, where their conditions are met, can give contributions and growth more favourable treatment than domestic US law alone. Whether they apply is fact-specific, so we document the position on each covered return.

Three points arise in almost every file. Salary sacrifice changes UK taxable pay, so US wages must be rebuilt from payslips, not copied from the P60. The pension may be reportable on Form 8938. And the IRS FBAR exceptions are framed around US retirement arrangements, so a UK pension in which you have a financial interest should be reviewed, and the conservative position is usually to include it.

Should you claim the foreign earned income exclusion or the foreign tax credit on late returns?

For most London consultants at partner, director or principal level, the foreign tax credit is the stronger tool, and the exclusion is a secondary consideration. UK income tax on high earnings is usually higher than the US tax on the same UK-source income, so the credit on Form 1116 tends to eliminate the US tax on UK-source pay entirely and can generate excess credits. The IRS explains the credit at https://www.irs.gov/individuals/international-taxpayers/foreign-tax-credit, including the rule that you cannot claim a credit for foreign taxes on income you have excluded from US gross income.

The exclusion is capped at an annual inflation-indexed amount, so for a high earner it covers only part of the income and forfeits the credit on that slice. It can still help in a lower-income year. The decision has a long tail: if you elect the exclusion and later revoke it, the regulation at https://www.law.cornell.edu/cfr/text/26/1.911-7 provides that you cannot make the same election again until the sixth taxable year after the revocation took effect without IRS consent.

Can the exclusion still be elected on a late return? The same regulation allows it on an original return filed within one year after the due date, and on later returns in two situations. If no federal income tax is owed after the exclusion, a later return can carry the election whether or not the IRS has discovered the missed election, and must be headed Filed Pursuant to Section 1.911-7(a)(2)(i)(D). If tax is still owed after the exclusion, the election is valid only if Form 2555 is filed before the IRS discovers the failure to elect. Because a Streamlined submission is normally made before the IRS has raised the issue, the exclusion is usually still available, but the choice should be modelled year by year, not made by default.

Worked example: a London principal with heavy US travel (illustration)

The following is an illustration only, using invented figures and an assumed exchange rate of 1.27 US dollars to the pound. It is not a calculation of anyone's actual liability. Consultant A is a US citizen who moved to London in 2018 and is now a principal at a London consultancy, employed through PAYE. A has filed no US returns or FBARs since moving and plans a Streamlined Foreign Offshore submission in November 2026, when the covered tax years are taken as 2023, 2024 and 2025 and the FBAR years as 2020 to 2025.

Step one is the day count. Rebuilt from travel and time records, A's days touching the United States were 58 in 2023, 27 in 2024 across four trips, and 49 in 2025. That gives 307 full days outside the United States in 2023, 339 in 2024 (a 366-day year) and 316 in 2025. Only 2024 passes the 330-day count. A's family home, children's schooling and office are all in London, and A keeps no US dwelling, so 2024 also has no US abode. One qualifying year is enough, and A is eligible for the foreign programme even though two of the three years fail.

Step two is sourcing 2025 earnings. A's 2025 base salary was GBP 240,000. A worked 224 days in 2025, of which 41 were on US client sites, so 18.3 percent of base pay, about GBP 43,929 or roughly USD 55,789 at the assumed rate, is US-source. A also received a GBP 90,000 cash bonus in March 2025 for 2024 performance; in 2024 A worked 19 of 226 days in the US, so about 8.4 percent of that bonus, roughly GBP 7,566 or USD 9,609, is US-source. A GBP 60,000 deferred share award granted in 2025 and vesting in thirds from 2026 is not income in 2025 on these assumptions, but each future vesting will need its own look-back apportionment.

Step three is the method. With total 2025 cash compensation of GBP 330,000, about USD 419,100 at the assumed rate, the exclusion would cover only a fraction of A's pay. The UK-source portion has borne UK income tax well above the US tax on that income, so the foreign tax credit removes the US tax on it. The US-source portion, about USD 65,000 in total, is where US tax is actually due, along with statutory interest, and A's UK position may then support a claim for relief for that US tax. Step four is the FBARs: A held a UK current account, a cash savings account, a stocks and shares ISA, an employer share-plan nominee account and a workplace pension, and the aggregate maximum balance exceeded the FBAR threshold in every year from 2020, so six FBARs are filed through BSA E-Filing with the Streamlined statement.

How do you write the non-willful certification on Form 14653?

Form 14653 is the certification at the centre of the submission. You certify that you are eligible, that all required FBARs have now been filed, and that your failures were non-willful, and you set out the specific reasons and facts. It is signed under penalties of perjury and is the first document an examiner reads.

For a senior consultant, the narrative must deal head-on with sophistication. You advise boards for a living, so a generic statement that you did not know the rules reads poorly. A credible narrative explains what you actually believed and why, for example that UK PAYE was final or that the firm's mobility support covered only a secondment year, and when you discovered the obligation. It must never overstate ignorance that your own emails or prior returns would contradict.

It should be consistent with prior filings, specific about dates, cover every type of failure, and address any red flag, such as a bank asking for a W-9, rather than leave an examiner to find it.

Which UK accounts belong on the late FBARs?

Any US person with a financial interest in, or signature or other authority over, foreign financial accounts must file an FBAR if the aggregate value exceeded 10,000 US dollars at any time during the calendar year. That aggregate test catches almost every London professional. The accounts we routinely see on consultant FBARs include UK current and savings accounts, cash and stocks and shares ISAs, employer share-plan nominee accounts holding vested shares, investment platform accounts, joint accounts with a non-US spouse, and the pension accounts discussed above.

Signature authority is a quieter partner-level issue. A partner who is an authorised signatory on firm accounts can have an FBAR obligation without any financial interest, so check the firm's bank mandates.

What are the most common failure modes in consultant submissions?

In the consultant files we prepare, the problems that cause rework or risk are predictable:

Counting nights in the US instead of calendar days touched, which overstates days outside the United States.
Using the FEIE rolling 12-month window to argue Streamlined eligibility for a calendar year that fails.
Ignoring US-source workdays, so no US tax is shown on income the US actually taxes first.
Assuming the LLP is a partnership for US purposes without confirming its classification.
Leaving the pension and share-plan accounts off the FBAR and Form 8938.
A boilerplate Form 14653 narrative that does not engage with the taxpayer's seniority.

None of these are reasons to delay: the route is only usable before an IRS examination of the delinquent years begins. Get the day count, deferred awards, LLP classification and narrative right, and you return to compliance with tax and interest only.