109 countries have now either exchanged or committed to exchange financial information in accordance with the Common Reporting Standard (CRS). The early adopters of the CRS agreed to exchange information for the calendar year 2016 by September 2017 and the later adopters who agreed to exchange information for 2017 will have done so in September 2018.
Following this extensive exchange of information between countries, HMRC have had a programme of issuing what are known as nudge letters. These ask people to either confirm that they are compliant in reporting their overseas income and gains, or commit to bringing their affairs up to date through the Worldwide Disclosure Facility (WDF).
We are aware that similar letters are being sent this month to clients who are dealt with by the Wealthy and Mid-sized business unit.
We would advise clients to consider their position clearly. Where they are content that they are compliant, it is our policy to advise the client not to tick the box provided by HMRC and sign the declaration, but for the adviser on behalf of the client to confirm that to the best of the client’s knowledge and belief, all overseas income and gains are reported correctly and in full on their tax return.
We would also advise clients to ensure that all of their undistributed income, within reporting funds has been correctly disclosed.
It is possible that a client may have unknowingly failed to declare a gain or income, such as from the sale of a property or rental income, where tax has been paid in the country where the property is and the client is not aware there is a further possible tax liability in the UK.
Therefore where a client receives a letter, it is important that the adviser ascertains all assets held abroad, which may have generated any income or gain during the year and give consideration to how to respond to the letter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.