HMRC has carried out a very short consultation into proposed regulations which will have implications for everyone involved in providing tax advice, requiring advisers to notify their clients about the "Common Reporting Standard". 

This consultation was not published on HMRC’s website. Details were forwarded only to the Chartered Institute of Taxation (CIOT) on 1st February with a request for responses by 12th February.  Such a short consultation period is needed, say HMRC, due to the time constraints involved in producing regulations which are legally effective by 6 April 2016.

Many commentators are concerned that the proposals are being rushed through without proper care and consideration. Client notification is required under section 50 Finance (No.2) Act 2015.

Under the Common Reporting Standard (CRS), overseas financial institutions are obliged to provide details to HMRC about anyone who owns foreign investments and appears to be a UK resident, for example by having a UK postal address.

The new regulations require tax advisers (and accountants) who have provided offshore advice to clients to write to them about the CRS, telling them:

  • That HMRC will soon be getting data on overseas financial accounts.
  • That there are opportunities to come forward about your overseas tax affairs and make disclosures to HMRC if you need to.
  • About what could happen to those who don’t come forward: there are enhanced penalties and a proposed criminal offence for the failure to declare offshore assets.

HMRC will provide wording for standard notification letter which advisers will have to send to clients using HMRC branding.  Advisers will send an accompanying cover letter under their own letterhead which also includes some standard paragraphs provided by HMRC. 

Neither the standard notification letter nor the standard paragraphs for the cover letter have yet been produced by HMRC.

The original deadline for notifying clients of 30 April 2017 will be extended due to the delays in publishing guidance. 

Proposed penalties for non-compliance are £300 per firm (not per client) and some commentators have noted that this is low compared with the potential costs of actually complying with the regulations as they stand.

Additional concerns which have been raised about the consultation and the available guidance include:

  • The costs involved in identifying clients who should be notified.  It may be easier for some firms simply to notify all clients rather than take time to identify relevant ones.
  • The costs involved in printing, processing and posting letters.  The guidance suggests that paper is the preferred medium to use although clearly sending emails would be far cheaper.  That said, not all firms have fully embraced emails yet, and nor have all their clients.  Indeed, not everyone has access to a reliable, fast internet service.
  • The use of HMRC standard notification letter and wording.  It is impossible to respond constructively to this part of the consultation when no-one has had sight of the documents that HMRC want advisers to send.  Advisers are understandably less than enthusiastic about sending signed letters under their own letterhead which include words provided by HMRC.

We await publication of CIOT’s comments and HMRC’s response with interest. We will publish a standard letter for advisers to use once we know what HMRC wants to say.


26 May 2016: HMRC confirmed that the 30 April 2017 deadline will be extended due to delays in publishing guidance on this measure. 

15 February 2016: the CIOT report that this consultation has been extended until 22 April 2016.