UWorld::ComponentOverlapMultiByChannel and internally, the call to FBodyInstance::OverlapMulti, misses overlaps and blocking hits when the PrimComp's (the component used to test overlaps) mesh uses simple collision, the target component uses complex collision and the PrimComp is overlapping the target component due to (and only due to) being rotated.
Verified that this used to work in 5.2, but broke as of 5.3.x.
See attached repro project (internal) which targets UE 5.2.1 and debug prints to screen.
The overlap is detected in 5.2.1 but missed in UE 5.3.x (tested 5.3.1 and 5.3.2).
There's no existing public thread on this issue, so head over to Questions & Answers just mention UE-199987 in the post.