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Automatic Exchange of Information – Notifications

By Julia Penny

Offshore tax advice leads to requirement to notify clients of automatic exchange of information

As more laws are enacted around the world to share information about tax and income issues, the UK has recently produced SI 2016/899 The International Tax Compliance (Client Notification) Regulations 2016. The aim of this is to ensure that relevant clients of financial institutions and professional advisors are made aware of this information sharing.

In outline, the rules require specified financial institutions and relevant persons to make “client exchange of tax information” notifications to all of their specified clients by 31 August 2017. All clients who need the letter must be identified by 31 December 2016. There are various ways in which the relevant clients can be identified, with information being provided in the guidance.

Whilst most readers of this article will not be financial institutions, you may well be relevant persons. These include tax agents or advisors; solicitors or financial advisors that have provided offshore advice or services. These need to have been provided in the course of business or have led to an individual being referred to a connected person outside the UK for the provision of advice or services related to the individual’s personal tax affairs. There are however, various exemptions relating to advice to, or referrals for employees or advice solely in connection with the preparation of returns required by Section 8 of TMA 1970(6). If you think you are affected check the detail in the Statutory Instrument.

The notification required is set out on the HMRC website and this should be sent along with a covering letter. This can be done by post or email if the latter is how you usually communicate with the client and you expect them to read it. There are requirements regarding the covering letter/email as well as the set notification. As mentioned above there is guidance which can be accessed here.

Non-compliance with the Regulations could be costly. For a breach in the Regulations 12B-E the penalty is £3000 and for other Regulations it is £300. In essence this means that if the notification is not provided to the client by the deadline a fine of £3000 will be charged.

So, if you provide offshore tax advice or services then make sure you act promptly. Remember, you only have until 31 December 2016 to identify the clients that must be notified, although you have longer to actually make the notifications. On the plus side, the notification to clients and account holders reminds individuals of their responsibilities to get their tax right and suggests they take advice!


November 2016 


This article is published with the understanding that SWAT UK Limited is not engaged in rendering legal or professional services. The material contained in this article neither purports, nor is intended to be, advice on any particular matter. This article is an aid and cannot be expected to replace professional judgment. SWAT UK accepts no responsibility or liability to any person in respect of anything done or omitted to be done by any such person in reliance, whether sole or partial, upon the whole or any part of the contents of this article.


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