What are HM Revenue & Customs (HMRC) going to do with all the information now being exchanged under the Common Reporting Standard (CRS)?
HMRC no longer have the resources in terms of staff to sift through all the data. The answer lies in HMRC’s use of their CONNECT software. Moreover, HMRC have all ready started the process resulting in unexpected spikes in focused groups such as individuals connected to Germany.
There has been a dramatic increase in number of concerned taxpayers this month that have a connection with Germany. It may just be a pure coincidence and it may be that the information is either incorrect or capable of simple explanation. Some of the concerned taxpayers are resident in the UK but their home is in Germany or they have income bearing assets in Germany such as a bank account, shares or perhaps a property.
Next month it could be another country.
Or it could be you.
HMRC’s approach is to send out what are called “nudge letters”. The letters do not say that the reader is under investigation or what the CRS data says but rather that “HMRC holds information that suggests your UK tax affairs are incorrect.” The letter goes on to say that any corrective action or Disclosure can be made on-line through the Worldwide Disclosure Facility (WDF).
Each letter from HMRC has a unique reference so clearly HMRC are monitoring responses or potential lack of responses.
The WDF is not the easiest of systems to have been derived by HMRC. The writer admits to having struggled to get some Disclosures to go through even after resorting to using the Help-desk!
Nevertheless it shows that HMRC are processing information and issuing a subtle challenge.
What should taxpayers do?
Don’t ignore the letter.
Recipients should consider what may have prompted the letter and, if straightforward, correct matters.
Anything “odd” may need special attention and you may need to consult someone with experience in such matters. I can be contacted at email@example.com or Andy at amaxfield @hwca.com.