Following a limited consultation with professional bodies and selected businesses, the government has published the International Tax Compliance (Client Notification) Regulations, SI 2016/899, setting out the new obligation on financial institutions and professional advisers to notify certain clients of the information HMRC will receive automatically under the common reporting standard from 2017. The regulations specify those individuals to whom a ‘client exchange of tax information notification’ must be sent and prescribe the form in which the notification must be made. Both financial institutions and tax advisers must send these notifications to their specified clients by 31 August 2017. The power for these regulations was introduced by F(No. 2)A 2015 s50.
Financial institutions must notify individual account holders who were UK resident for the tax years 2015/16 or 2016/17 and held an account with the institution on 30 September 2016, which was either:
· worth more than $1m; or
· held in a participating overseas jurisdiction, including referrals by another financial institution.
Tax advisers must notify individuals who they have provided with either:
· general personal tax advice (the ‘general approach’); or
· specific offshore tax advice (the ‘specific approach’), including referrals to connected overseas advisers to provide such advice.
Both approaches exclude individuals if the adviser:
· reasonably believed them to be not resident in the UK for the tax years 2015/16 and 2016/17; or
· has no reasonable expectation of providing them with further advice beyond 30 September 2016.
Individuals for whom the adviser has submitted a personal tax return may also be excluded, provided the return has disclosed the overseas matter.
The regulations also specify the form in which a notification must be sent. This must include a leaflet prepared by HMRC, plus one of two prescribed statements (one for notifications by financial institutions; the other for notifications by tax advisers). The notification may be sent either in paper form or by email.
A flat rate penalty of £3,000 may be charged for non-compliance. HMRC must assess the penalty within 12 months of the failure first coming to its attention or, in any event, within six years.
HMRC consulted on draft versions of the regulations in 2015 and again for a short period in 2016 with group of representative bodies and businesses within the affected sectors.
These regulations come into force on 30 September 2016.
Following a limited consultation with professional bodies and selected businesses, the government has published the International Tax Compliance (Client Notification) Regulations, SI 2016/899, setting out the new obligation on financial institutions and professional advisers to notify certain clients of the information HMRC will receive automatically under the common reporting standard from 2017. The regulations specify those individuals to whom a ‘client exchange of tax information notification’ must be sent and prescribe the form in which the notification must be made. Both financial institutions and tax advisers must send these notifications to their specified clients by 31 August 2017. The power for these regulations was introduced by F(No. 2)A 2015 s50.
Financial institutions must notify individual account holders who were UK resident for the tax years 2015/16 or 2016/17 and held an account with the institution on 30 September 2016, which was either:
· worth more than $1m; or
· held in a participating overseas jurisdiction, including referrals by another financial institution.
Tax advisers must notify individuals who they have provided with either:
· general personal tax advice (the ‘general approach’); or
· specific offshore tax advice (the ‘specific approach’), including referrals to connected overseas advisers to provide such advice.
Both approaches exclude individuals if the adviser:
· reasonably believed them to be not resident in the UK for the tax years 2015/16 and 2016/17; or
· has no reasonable expectation of providing them with further advice beyond 30 September 2016.
Individuals for whom the adviser has submitted a personal tax return may also be excluded, provided the return has disclosed the overseas matter.
The regulations also specify the form in which a notification must be sent. This must include a leaflet prepared by HMRC, plus one of two prescribed statements (one for notifications by financial institutions; the other for notifications by tax advisers). The notification may be sent either in paper form or by email.
A flat rate penalty of £3,000 may be charged for non-compliance. HMRC must assess the penalty within 12 months of the failure first coming to its attention or, in any event, within six years.
HMRC consulted on draft versions of the regulations in 2015 and again for a short period in 2016 with group of representative bodies and businesses within the affected sectors.
These regulations come into force on 30 September 2016.
