Automatic exchange of information
HMRC are actively trying to deter and tackle tax non-compliance, such as tax evasion, in a few different ways. One such way is through Automatic Exchange of Information (AEoI) agreements. These agreements allow HMRC to automatically communicate with financial institutions and overseas tax authorities in order to share data. A financial institution may be a bank, building society, stockbroker or insurance company. This applies whether you are UK resident with a non-UK account, or a non-UK resident with a UK account.
This data can include:
- Your name
- Your address
- Your date of birth
- Your tax reference number (if you have one)
- Details of any accounts you hold with financial institutions inside or outside of the UK
- Your bank balance at the end of the calendar year
- The amount of interest, dividends or other income received from your accounts
UK account providers send the relevant information to HMRC, who then share the information with the relevant overseas tax authority if the account is held by one of their tax residents. If you are a UK tax resident with an account outside the UK, HMRC will receive the information from the relevant tax authority and use it for the purposes of our tax administration functions.
Why does this happen?
Many UK residents receive offshore income and assets but do not declare them to HMRC. Mistakes happen, but some people deliberately choose not to declare this income in order to evade paying tax. As mentioned above, this is also the case for non-UK residents with UK based income.
These global measures see information automatically exchanged with over 100 jurisdictions, in order to ensure that the correct tax is being paid. This has helped HMRC to recover over £560 million in offshore tax in 2018/19, and over £2.9 billion since 2010. To put that into perspective, according to government sources, that’s enough to build 6 new hospitals!
It is important to accurately declare your income on your tax return. If you are unsure about whether something needs to be declared, we advise picking up the phone and speaking our accounts team, who would be more than happy to discuss your queries. HMRC do contact individuals if they believe that a disclosure should have been made and may then impose penalties if the tax should have been paid. It is always in your best interest to come forward to disclose before HMRC approach you.
© Thandi Nicholls Ltd 2020 All Rights Reserved – The above articles are provided for guidance only and may not cover your personal circumstances so you should not rely on them. It is important that you seek appropriate professional advice which takes into account your personal circumstances where you can provide the full facts of the case and all documents related to your case. Thandi Nicholls Ltd t/a uklandlordtax.co.uk, K Nicholls FCA or S Thandi cannot be held responsible for the consequences of any action or the consequences of deciding not to act.
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