In the period to 31 August 2017 taxpayers are receiving letters from their financial advisors warning them of their disclosure obligations in respect of offshore accounts and assets.

Financial institutions providing offshore advice – referred to as specified financial institutions (SFIs) – and practitioners providing clients with advice or services on offshore income and assets (specified relevant persons) are required to send out a client notification letter. This must be sent to clients with offshore income or assets not disclosed in their tax returns advising them that offshore tax information will be shared with HMRC under the Common Reporting Standard. The notifications apply only to individual clients and there is no obligation to send a notification to a company or trust.

Under the UK Client Notifications Regulations which came into force from 30 September 2016 practitioners were obliged to notify clients with offshore accounts and assets that HMRC will soon be receiving data automatically from other jurisdictions in relation to UK tax residents and their offshore accounts. The data will be exchanged under the terms of agreements on the exchange of tax information.

From September 2017 HMRC will receive information on foreign assets of UK residents from other jurisdictions under the transparency rules referred to as the common reporting standard. More jurisdictions will begin exchanging data from September 2018. HMRC already has data about overseas accounts, structures, trusts, and investments from the UK’s Crown Dependencies and Overseas Territories and the client notification letter states that HMRC is already using information from overseas banks, insurers and wealth and assets managers to identify undisclosed tax liabilities.

The letter tells people who need to bring their tax affairs up to date to use the “worldwide disclosure facility” to disclose unpaid offshore tax. HMRC also warns that penalties will soon increase further.

A penalty of GBP 3,000 applies to a specified financial institution or specified relevant person not complying with the requirements of the Client Notifications Regulations by sending out the letter to a client.