The net is closing on expats and taxpayers with offshore accounts and investments who have not declared their interests to the tax man.
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Financial advisers who has referred a client to an overseas financial institution or to pointed them towards offshore advice or services must declare the information to HM Revenue & Customs by the end of the month.
At the same time, the adviser who has suggested clients take offshore advice or services since April 5, 2015 must warn them that HMRC has new powers to discover information about offshore cash and investments.
The warning must take the form of a template drafted by HMRC explaining how the tax authority now shares financial information with more than 100 countries – including British Crown Dependencies and Overseas Territories.
Requirement to correct
These include common tax havens such as the Cayman Islands, British Virgin Islands and Gibraltar.
Financial advisers must send a letter, text or email to clients seeking offshore advice even if they only referred the client overseas and did not provide any direct products or services.
Failing to deliver the warning by August 31 could lead to a £3,000 fine.
Under the common reporting standard, each tax authority is duty bound to make an annual report to other tax authorities in the network detailing any accounts or investments held by foreign taxpayers.
To encourage taxpayers to fully declare their offshore interests, HMRC has a new ‘requirement to correct’ procedure that offers lower penalties for non-disclosure until September 30, 2018.
From then, anyone moving or concealing offshore wealth could face a penalty of up to three times the tax they should have paid.
Common reporting standard
The rules apply to UK taxpayers who have a UK tax loss relating to the use of territories outside the UK to generate or shelter the losses.
Financial secretary to the Treasury Jane Ellison hailed receiving the additional data “a game-changer” in the battle to tackle tax avoidance and evasion.
“Every penny of tax that people evade deprives our public services of essential funding and we are focused on collecting all tax that is due,” she said.
Countries will introduce the common reporting standard in phases over the next two years, with the UK and related territories heading the first phase.
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