Offshore assets disclosure letters, Failure to prevent tax evasion and R&D Claims and disclosure

We had some serious topics to discuss in our latest email; first the obligation to write to clients about their offshore interests, and HMRC’s action in this area. Secondly; the introduction of the corporate criminal offence of failure to prevent tax evasion, which could impact your firm and your clients. Finally, a new deadline for submitting revised R&D tax relief claims and disclosure of information about companies which use that scheme.

Below is just an extract from last week’s tax tips email. To receive the full email when it is published each Thursday, simply follow the link on the right (or below, if you’re reading this on a mobile device)

Offshore assets disclosure letters

In our newsletter on 13 July 2017 we reminded you about your obligation to write to selected clients about declaring their overseas interests. The deadline for sending this letter is 31 August 2017.

Many financial advisers and banks have found it difficult to identify exactly which individuals they should write to, so they have sent a standard letter to all clients. This means your clients may have received a missive (possibly by email) from another adviser which contains some vaguely threatening text, as specified by HMRC. Those clients may come to you feeling alarmed or indignant.

This is a good opportunity to explain that the trigger for these letters is the introduction of the common reporting standard (CRS). This is an international initiative for tax authorities in over 80 countries to automatically exchange financial information in a common form, in a bid to catch tax evaders. The UK is an early adopter of the CRS, and has required financial institutions to report specified information to HMRC by 31 May 2017. HMRC is now starting to exchange that relevant information internationally.

As a result of receiving international data HMRC has written to certain individual UK taxpayers, asking them to make a declaration of competence with regard to their overseas income. These letters do not suggest that the taxpayer has failed to declare his overseas interests, but that is how the individual may interpret it.

Where your client has received such a letter from HMRC, you need to consider whether using the worldwide disclosure facility (WDF) is appropriate.