UK and 51 jurisdictions to share financial account details of resident taxpayers
The UK has signed up to a new automatic information exchange agreement, with 51 jurisdictions. This includes the Crown Dependencies and seven Overseas Territories. The new agreement confirms the adoption of the Common Reporting Standard (CRS) and will mean that the identity and residence of financial account holders (including certain entities and their controlling persons), account details, reporting entity, account balance/value and income/sale or redemption proceeds will be automatically shared with Her Majesty's Revenue and Customs (HM Revenue and Customs or HMRC) is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes including the national minimum wage.... More from September 2017 or September 2018. Information will be shared in respect of any individual identified by a reporting entity in one country as resident for tax purposes in another reportable country.
The list of jurisdictions and the date from which they will start to exchange information can be found here. Interestingly this list includes various ‘tax havens’ including the British Virgin Islands and Cayman Islands.
In our opinion, this information exchange will result in HMRC investigating any individuals whose personal UK tax affairs do not appear to have properly disclosed the information received from other jurisdictions.
There is often a very valid explanation for this i.e. taxpayers may be claiming the remittance basis of taxation and therefore have no requirement to report that income in the UK. Other taxpayers who have properly disclosed their non-UK investment income and gains should have no reason to be concerned. For those who hold non-UK investment’s, which have not been properly declared we would recommend action is taken now to bring your affairs up to date and to disclose any previously unreported income.
The benefit of doing this now is you will reduce your exposure to potential penalties and the stress of an HMRC investigation. We can help by working with you to quantify the tax exposure on your undisclosed income, corresponding directly with HMRC on all matters regarding the disclosure and penalty negotiation process. There a several ways to make a disclosure and we will be able to advise you on the right approach to take, once we understand your particular circumstances.
If you would like assistance with making a disclosure to HMRC please contact us to consider what options are available to you.