HMRC has said in its guidance that financial institutions and advisers falling under the obligations should:
notify clients about information HMRC will receive under automatic exchange of financial information agreements with more than 100 jurisdictions
remind clients of their tax obligations
highlight how clients can make a disclosure
warn clients about the increasing penalties and possible criminal prosecution if they fail to declare offshore assets.
The obligation is placed on financial institutions and also individuals and companies who provide advice or services to individuals relating to offshore accounts, income or assets. They are within the legislation and guidance referred as Specified Financial Institution and Specified Relevant Person.
Tax advisers are clearly referenced within the guidance material. The ‘specified’ firms and individuals are required to identify those clients falling within the legislation and send notifications in the form prescribed by the regulations to them on or before 31 August 2017.
The explanatory note of the SI states the following regarding Specified Relevant Person adviser obligations:
Other advisers are required to use either the ‘general approach’ or the ‘specific approach’ to identify individuals to whom the prescribed notifications described must be sent.
The general approach identifies individuals who were provided with any advice or services relating to their personal tax affairs by the adviser in the relevant period.
The specific approach identifies individuals who, in that period, were provided with offshore advice or services relating to such tax matters or were referred by the adviser to a connected person outside the United Kingdom for the provision of such advice or services.
Both approaches exclude individuals the adviser reasonably believes were not (or will not be) resident in the United Kingdom for the tax years 2015-16 and 2016-17 or for whom, on 30th September 2016, the adviser has no reasonable expectation of advising further or providing more services. The specific approach similarly excludes individuals for whom the adviser has prepared and delivered (or expects to do so) a personal tax return disclosing the effect of the advice or services provided. An individual identified using the general approach may be similarly excluded if the adviser so chooses.
This is what HMRC issued as guidance for those advisers who are a Specified Relevant Person:
To find the clients you need to notify, you can choose between the:
specific approach – identify individual clients you’ve provided with offshore advice or services, or referred overseas for this
general approach – identify all clients you’ve provided with advice or services for their personal tax affairs (between 1 October 2015 to 30 September 2016).
You only need to use one of these approaches. If you don’t find any clients to notify from an approach, you don’t need to do anything else.
If you’ve referred a client for offshore advice or services
You still need to send the notification letter to clients if you’ve referred them for:
an overseas account
advice or services overseas
You must notify the client even if you didn’t offer advice, products or services directly.
The guidance also includes the text to be used and information that needs to be sent to the client.
Finally the Regulations also provide a penalty of £3,000 for failing to comply with the obligations. The Explanatory Note to the regulations states that ‘this penalty must be assessed within the period of 12 months beginning with the date on which the failure first came to the attention of an officer of Revenue and Customs or, in any event, within six years. Penalties for other breaches of the International Tax Compliance Regulations 2015 are unchanged.’