Since 2016, HMRC has been getting new financial information about UK taxpayers from other countries. We have had reports recently of UK taxpayers with bank accounts in France receiving letters from their French bank informing them that the bank will be sending information to HMRC about the existence of the foreign account, the account balance, and the amount of interest credited in 2016.
HMRC is using this information to check that people are paying the right amount of UK tax, but it wants to make sure that taxpayers know about the Common Reporting Standard. Waiting for French banks to write to their customers would be one way taxpayers could find out, but another way is to use UK law to require accountants and tax advisers who give tax advice to write to their clients. This is what has happened and HMRC has specified the precise wording and format of the letter which might need to be sent by advisers to their clients.
The Tax Faculty has published TAXguide 12/17 explaining the legal requirement for financial institutions and professionals, including tax advisers, to write to clients before 31 August 2017, to whom they have given advice on offshore matters. The purpose of the letter is to make clients aware that from 2017 HMRC will begin to receive information from other tax authorities, that there is a new time-limited disclosure opportunity to correct their tax affairs and that if non-compliant taxpayers continue to conceal their tax affairs, HMRC will enforce tough penalties for offshore evasion.
The legal requirement to notify clients does not apply to all advisers or to all clients. The TAXguide explains the rules and suggests how you might comply with them. We include a suggested covering letter to clients.
Once again more regulations on the profession which will result in significant additional costs. Who is going to pay for all this work my small practice now has to do. The client? HMRC? No it will be us.
I find it very frustrating that I am increasingly being made into another arm of the HMRC and being expected to be pay for the honour with the threat of severe penalties if I don't comply. And as far as I can see my professional body just accepts this without a murmur.