Common Reporting Standard
Common reporting standard – introduction
The Common Reporting Standard (CRS) is an agreement between over 100 jurisdictions to facilitate a universal system of automatic information sharing. In particular, this relates to UK residents holding foreign investments and property or has a source of overseas income. The CRS was agreed with the intention of countering cross-border tax evasion.
UK residents with overseas investments will be notified by financial institutions holding relevant information, that they will be notifying HMRC of any relevant information. They will also notify people of any opportunities that they may have to disclose all relevant information to HMRC, before HMRC find out and any potential consequences
The information that is shared with HMRC includes,
- Personal details, such as name, date of birth, Taxpayer ID Number and address;
- Account Number(s);
- Annual balances and valuations;
- Interest paid;
- Proceeds of assets sold.
The UK introduced legislation as part of the CRS, alongside providing a disclosure mechanism, whereby UK resident non-domiciled taxpayers can declare any relevant information, without being subject to the most severe of penalties that may apply when HMRC are notified under the CRS. Please see our article on Requirement to Correct.
Alongside financial institution, professional advisers and agents who have provided offshore advice, those who have referred someone to a professional outside of the UK for the provision of offshore advice must notify their client of their obligation under the CRS.
Offshore advice, includes advice in relation to:
- Accounts held in a relevant jurisdiction;
- A source of income falling into the definition of ITTOIA 2005, s830 which arises in a relevant jurisdiction;
- A source of employment income falling into the definition of ITEPA 2003, s7(2) which arises in a relevant jurisdiction;
- An asset held in a relevant jurisdiction.
Sharing of Information
Once HMRC has received information from relevant institutions in participating jurisdictions, HMRC will seek to collect any tax owed, alongside interest and any applicable penalties.
Conclusion – Common Reporting Standard
The Common Reporting Standard is further evidence that there a few places to hide in the international war for transparency. If you are unclear as to whether you have met your tax reporting obligations then you should not hesitate to take remedial action.
If you ,or your client, have any queries around the Common Reporting Standard or any other related tax matters then please do not hesitate to get in touch.
Common Reporting Standard was last updated on 11 January 2019