With the UK Government and HMRC continuing to take a robust approach to tax investigation, with a view to collecting significant additional tax revenue, HMRC’s powers to inspect and request information and documents about your personal financial affairs and business interests have never been greater.
In this last post on end of year tax planning, we take a quick look at some of the provisions you need to be aware of as you collate your financial information.
Transparency and information exchange
There has been a significant increase in the transparency of information between jurisdictions. Information is now shared each year between countries and it is most likely that the beneficial owner of every trust and company will have to be identified.
Consequently, it is now said that HMRC has more information in its database than is held in the British Library and in one of the government’s few IT success stories, HMRC has its “Connect” computer programme which allows it to interrogate this information to identify discrepancies between data exchanged from other jurisdictions and tax returns submitted.
Common Reporting Standard
As a consequence of this data exchange, it is ever more important that you ensure the financial institutions which hold your money or administrate your financial structures, hold accurate information. In this way, only relevant and correct information should be reported under the Common Reporting Standard and in turn, this will reduce the likelihood of HMRC commencing an enquiry into your taxation affairs on the basis of a misconception.
Trust Registration Service
All trusts with a liability to UK tax are now required to register with and report to the new Trust Registration Service.
This digital service replaces the previous paper based notification of liability to UK tax under the Self Assessment system and also enables HMRC to collect the information required under the new Regulations.
The information required relates to all “beneficial owners” of taxable relevant trusts, including the settlor(s), the trustee(s), the beneficiaries and potential beneficiaries and any individual who has formal or informal power to direct or restrain the administration of the trust.
The scope of the Trust Registration Service will expand in 2020.
If you are concerned you may be the subject of a tax investigation, or if you’d like any more information about end of year tax planning, please get in touch.