Tax experts from Irwin Mitchell Private Wealth are urging offshore investors to be aware of the “unprecedented” level of information that will be available to the UK revenue authorities in 2017 under new Common Reporting Standards (CRS).
CRS – developed by the OECD and endorsed by the G20 finance ministers in February 2014 – are designed to provide a worldwide annual snapshot on the wealth of clients. The new rules will subject their tax reporting to new standards and provide HM Revenue and Customs with a huge amount of financial information designed to counter tax avoidance and evasion.
Andrew Watters, tax partner at Irwin Mitchell Private Wealth, said:
“Financial institutions in about 100 countries, which include banks and trusts, will be required to gather and share an unprecedented amount of information on the names of account holders, details of accounts, account activity, and balances.
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“That information will be cross-referenced to information already held. Where there is any perceived mismatch, enquiries will be made. If it transpires that tax reporting has been inaccurate, and if that inaccuracy is seen to be “careless” or “deliberate”, then HMRC have the power to collect back tax, interest and to impose civil and criminal penalties.
“Given the growing complexity of tax legislation, it will not be surprising if a number of people are “caught” who are unaware of their transgressions. The burden of proof in proving innocence will fall on the taxpayer. The collection of information for CRS has now started and anyone with offshore interests should be reviewing their position with some care.”