The Common Reporting Standard (CRS) calls on jurisdictions around the world to obtain financial information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis’.
So which countries are participating under CRS?
At present, 90 jurisdictions have publicly committed to implementation. The UK is just one of 52 jurisdictions (including British Virgin Islands, Cayman Islands, the Isle of Man, Jersey and Guernsey) having committed to being ‘early adopters’ to implement the first automatic information exchanges in September 2017. Yes, September 2017 – just a few months away.
This first automatic exchanges of financial data is likely to be interesting to say the very least.
The remaining nations (including Bahamas, Switzerland and the UAE) will undertake their first exchanges in September 2018 in a second batch of multi-lateral exchanges.
What will all this mean?
Never before will HM Revenue & Customs (HMRC) receive so much good quality data from around the world. yes, HMRC has undertaken specific challenges and wider campaigns in the past but not on this scale before.
Is this a problem?
For some, yes.
Those who have prepared the data to being exchanged will have spent months collating the data – but how accurate is the data being exchanged?
Anyone who is the subject of the data they may get an unwelcome letter from HMRC that says “HMRC hold information that suggests your past tax returns may be incorrect”.
What will HMRC do next?
The most likely next step will be for HMRC to check and verify the data received on a taxpayer. If the data can be corroborated, then the taxpayer can expect an immediate challenge by HMRC.
Where there is no corroborative data, HMRC are likely to use their Connect software and undertake further data mining. This will identify any other links to addresses, bank accounts, companies etc.
What should taxpayers do if they fear they have a problem?
Seek professional advice, urgently.
We all know that any financial information can be wrong. Rarely will it be totally wrong. HMRC will be of the view that there is “no smoke without fire”.
Anyone seeking advice can contact me at firstname.lastname@example.org or Andy at amaxfield@hwca,com.