The Common Reporting Standard and You
What is the Common Reporting Standard (CRS)?
The Common Reporting Standard (CRS) is an internationally co-ordinated agreement to exchange personal financial information between jurisdictions. Over 100 countries have now signed up obliging banks, brokers, Trustees, and others to make returns of their customers’ and beneficiaries’ interests to be passed on to “home” tax territories. HMRC will use this data through their high-tech analysis systems to identify suspected evasion which could in extreme cases lead to criminal prosecution.
Who will CRS affect?
CRS will affect all UK residents, regardless of domicile, who have offshore interests that may produce income or gains or affect inheritance tax. Financial Institutions are looking through nominee entities such as offshore companies, trusts, foundations etc., to report on the relevant “controlling person” or ultimate beneficiary.
How will CRS affect me?
Although the rationale behind CRS is targeting deliberate tax evasion, HMRC is confident that CRS will enable them to detect other forms of offshore non-compliance, regardless of whether it was deliberate or the result of a genuine error or carelessness. As soon as data analysis is completed, HMRC will start asking questions and maybe open enquiries.
What do I need to do?
Everyone with an offshore interest, needs to ensure that they are fully compliant with UK tax requirements such that all offshore income and gains have been correctly reported in the UK. If you think your tax returns may need amending there is a window of opportunity to correct any error before harsher penalties are introduced. This window runs from now until 30 September 2018.
What happens if I don’t do anything?
If you do not voluntarily correct any errors to your returns, following 30 September 2018, should HMRC themselves find an error, the penalties for unpaid taxes will be up to 300% of the tax unpaid and a minimum of 100% of the tax due.
Now is the time to review your affairs…
For more information, please call Rebecca Potton on 01923 224411.