HMRC And The Common Reporting Standard
How the taxman can find out what you've got ...
POSTED BY JONATHAN VOWLES ON 22/12/2015 @ 8:00AM
Over the years, the Government have become aware of the large amount of undisclosed wealth held offshore. Wealth which, if taxed, gives a great big revenue boost to the Treasury coffers ...
Using the Common Reporting Standard, HMRC can find out what's in your offshore accounts!
copyright: lightwise / 123rf stock photo
But that's only if the government concerned can find sufficient data from those financial institutions around the world. And this is where the Common Reporting Standard (CRS) comes in! The CRS is a global standard for the automatic exchange of information - and it has been coordinated by the Organisation for Economic Cooperation and Development (OECD).
"Ninety countries have so far committed to it, and the list still growing!"
What this means is that financial institutions in those ninety countries will be obliged to provide details to HMRC (via their own government) about anyone who owns foreign investments and appears to be a UK resident, for example by having a UK postal address.
When is this taking place? Well, the reporting won’t start until 2016 with Crown Dependencies and Overseas Territories. Most of the countries on the list will start this in 2017. However, don’t breathe a sigh of relief as what they are going to report is likely to cover bank accounts which existed in 2014 and 2015!
The information reported to HMRC will include:
Does this affect you? Do you have an overseas bank account, holiday home, limited company or investment of any sort? Or do you know someone who does?
"If you are going to be affected then make sure that your tax affairs are up to date!"
Quite simply, if you are up-to-date then you can sit back and relax with peace of mind. On the other hand, if you aren’t up-to-date then do something about it now! Definitely do something before the taxman’s little brown envelope lands on your doorstep because if you volunteer information, your final bill from the taxman will be smaller than if they find you first!
Exactly what action HMRC will take on receipt of all this new data remains to be seen. However, based on past experience, what is most likely is a number of potentially costly tax investigations will be started.
"My hope is that there will be another amnesty!"
But what is more likely is that HMRC will just invite those individuals concerned to make a full disclosure to save them the time and cost of launching a tax investigation.
But be warned, where HMRC are not able to confirm compliance they will, most definitely, investigate!
Until next time ...
More about Jonathan Vowles ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas, which can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.