On 8 September 2016 final regulations were published that implement the client notification obligations in s222 FA 2013. The regulations take effect from 30 September 2016. These obligations require certain financial institutions and professional advisers that provide offshore advice or services in the course of a business, to identify relevant clients and give them prescribed information about automatic exchange of financial information, disclosure opportunities and penalties for non-compliance. Some changes have been made to an earlier draft circulated by HMRC.
The Government announced in the March 2015 Budget that HMRC would be given powers to require financial institutions and advisers to notify their UK resident customers of the full impact of the Common Reporting Standard (CRS), penalties for tax evasion and disclosure opportunities. The International Tax Compliance (Client Notification) Regulations 2016 bring these new powers into force with effect from 30 September 2016.
The final regulations include some concessions to help alleviate concerns raised, e.g. for advisers the obligations are restricted to clients that have been given advice in the year ended 30 September 2016 and there is also a carve-out for former clients where there is no expectation of a continuing relationship. Organisations with charitable or other non-profit purposes are excluded from the client notification obligations, even if they are considered to be a financial institution under the CRS.
HMRC have confirmed that full guidance for ‘Specified Financial Institutions’ and ‘Specified Relevant Persons’ will be issued shortly, ahead of the regulations coming into force. HMRC will also include information on the gov.uk website for customers who receive a notice and would like further information.
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