Under Section 50 Finance (No 2) Act 2015, UK advisers (accountants etc.) are required by law to contact those who were clients between 1 October 2015 and 30 September 2016. Following an international move towards tax transparency, HM Revenue & Customs (HMRC) require advisers to follow their interpretation of Client Notification Requirements.
What are Client Notification Requirements?
Advisers are to communicate by post or by email using certain standard paragraphs and a enclose a HMRC fact-sheet.
Why is this necessary?
The International Tax Compliance Regulations 2015 (SI 2015/878) were enacted on 30 September 2016. This created an obligation on certain types of business to tell their clients:
- That HMRC will soon be getting data on overseas financial accounts
- That there are opportunities for taxpayers to come forward about their overseas tax affairs, if they need to
- About what could happen to those taxpayers who don’t come forward
Advisers have until 31 August 2017 to comply. Any adviser that fails to comply faces a penalty of £3,000.
What might be the result of following “Client Notification Requirements”?
A direct result will be to alarm perfectly innocent taxpayers.
The intended outcome is that HMRC are following up on their Requirement to Correct policy which requires taxpayers to correct any historical UK tax position. HMRC direct taxpayers to the Worldwide Disclosure Facility (WDF). The WDF runs until 30 September 2018.
However, care is needed as any penalty which may not be correct.
Failure to correct by 30 September 2018 could result in HMRC applying higher penalties and even asset based penalties.
What should taxpayers do?
UK taxpayers and indeed non taxpayers should consider their past UK tax compliance carefully. Recipients should seek professional advice if they are unsure about any matter or know that they have something to correct.
Paul and Andy can be contacted at firstname.lastname@example.org and email@example.com respectively. We offer an initial consultation free of charge.