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TAXguide 12/17 - Common reporting standard: requirement to notify clients

In TAXguide 12/17 the Tax Faculty explains the new legal requirement for financial institutions and professionals, including tax advisers, to write to clients to whom they have given advice on offshore matters. The legal requirement to notify clients does not apply to all advisers nor to all clients. The guide outlines the rules, suggests how you might comply and provides a draft client letter.

TAXguide 12/17

All ICAEW members can download this guidance in full.

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Written by Jane Moore, a technical manager in the Tax Faculty and editor of TAXline, this TAXguide covers the new legal requirement for financial institutions and professionals, including tax advisers, to write to clients to whom they have given advice on offshore matters.

Since 2016, HMRC has been getting new financial information about UK taxpayers from other countries around the world. It is using this information to check that people are paying the right amount of tax, but it now wants to make sure that taxpayers know about this.

One way to do this is through accountants and tax advisers who give tax advice and to require them to write to their clients to warn them. HMRC has specified the precise wording and format of the letter which might need to be sent by advisers to their clients.

The purpose of the letter is to make clients aware that, from 2017, HMRC will begin to receive information from other tax authorities, that there is a new time-limited disclosure opportunity to correct their tax affairs and that if non-compliant taxpayers continue to conceal their tax affairs, HMRC will enforce tough penalties for offshore evasion.

The legal requirement to notify clients does not apply to all advisers or to all clients.

TAXguide 12/17 is available to all ICAEW members and provides an explanation of the rules and suggests how you might comply with them, covering:

  • Whether the obligation applies to you
  • How to identify the clients to write to
  • What to do if a client is not UK domiciled and and is no obligation to show unremitted overseas income on their return
  • What is offshore advice or services?
  • What to do if you have clients within the reporting obligation
  • Whether you can send an email rather than a letter
  • When you must send the letter

The TAXguide also provides links to where you can find further HMRC guidance and Appendix 4 provides the text of a draft letter specifically addressed to your client.