It seems like the Finance Bill 2020/21 will not only bring changes to the pensions industry, it will also benefit the taxman, possibly to the detriment of the taxpayers. The bill will essentially give the government carte blanche for accessing taxpayer information through a financial institution notice (Fin).
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
Financial institution notices add on to HMRC’s existing powers, allowing them to request documents and/or information about specific taxpayers from banks and financial institutions without the taxpayer’s consent or permission from a tax tribunal, which is currently the case.
What is happening?
In order to help fund some of the recovery efforts from the coronavirus pandemic, HMRC has cracked down on finding people with undisclosed offshore assets. The government needs to shrink a £31bn gap so you can be sure they’re going to pursue all avenues to do so.
If you receive a notice to disclose offshore asset you must complete a certificate within 30 days. This gives you the “opportunity to review your tax affairs” and alert them to any oversights made in the past when paying tax.
HMRC is identifying taxpayers whose account data and tax return filings don’t match up through Connect, a state of the art computer system. As with any technology, there will be errors so don’t panic if you do get a notice, it doesn’t necessarily mean you’ve done anything wrong.
What can you do?
Fins have been introduced to expedite HMRC’s information-gathering process, specifically if the UK taxman is working with other jurisdictions under tax treaties and conventions. It will be incredibly useful to HMRC with tax enquiries and investigations.
So, expect the government to start issuing these notices more and more. If you ever find yourself on the receiving end of a notice, make sure you’re aware of what you’re legally required to do and be prepared to deal with it. It’s best to seek advice from your accountant or financial adviser because mistakes could lead to criminal proceedings.
There’s no telling what information will be requested of you. Don’t hesitate to reach out for advice at any time. We’re here to help.
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