TaxAug 23 2017

Advisers face looming HMRC tax deadline

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Advisers face looming HMRC tax deadline
ByDamian Fantato

Financial advisers have until the end of this month to contact their clients about new HM Revenue & Customs powers.

The rule relates to any financial adviser who has referred a client for an overseas account or referred them for advice and services overseas.

By Thursday 31 August any financial adviser who has provided this service for a UK tax resident in 2015/16 or 2016/17 must warn them about new HMRC powers.

The letter or email has to include set text warning them about new information sharing agreements with more than 100 jurisdictions around the world which will provide HMRC with “unprecedented” levels of information to make sure the right tax is being paid.

HMRC has said clients who have declared all past and present income or gains, including from overseas, do not need to worry.

The rule is part of a tough new regime to crack down on tax avoidance.

Next month even more data will come in from around the globe when the Common Reporting Standard comes into force.

In advance of this new information coming into the hands of the taxman, HMRC has introduced a new rule called the “requirement to correct”.

This will mean any person with UK tax irregularities related to offshore interests must come forward and correct those liabilities by 30 September 2018.

After this date, any person who is found to have failed to have corrected their affairs will be subject to a tough new set of sanctions.

The requirement to send out these letters or emails applies to banks, building societies, fund managers, wealth managers, solicitors and financial advisers.

Financial advisers can either take a “specific” approach, contacting only the clients they have provided this service to, or a “general” approach, contacting all their clients they have provided tax advice to between 1 October 2015 and 30 September 2016.

Clients must be notified even if the adviser did not provide advice, products or services directly and they were instead referred elsewhere.

The letter must include the firm’s branding, the client’s name and address and a set text provided by HMRC.

Advisers who do not comply in time could face a £3,000 fine.