Exchange of information – Are you fulfilling your tax obligations?


Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Now that global exchange of information is underway it’s important to ensure you are correctly declaring your income and assets, and to the right country.

Now that global exchange of information is underway it’s important to ensure you are correctly declaring your income and assets, and to the right country.

Our October Wealth News included an article about the rules on Automatic Exchange of Information; where financial institutions in one country are providing details of clients who live in other countries to the relevant authorities. The information will be provided automatically and include such things as name, dates of birth, addresses and the amounts of capital held and income produced.

Over recent months, many of you have probably received forms from banks and other providers asking for your tax identification numbers in the country where you live in order to make the reporting easier. We are frequently asked what to do about these requests and our advice is to always to make sure that you fully declare everything, even where accounts are held under a UK registered address.

There seems to be a lot of online discussion on this subject on various expatriate websites, and it is quite concerning that some people advocate ignoring the requests or even giving false information.

Under ‘The International Tax Compliance (Client Notification) Regulations’ which were issued in the UK, financial advisers must now issue clients with a document from HMRC explaining the requirement to declare all non-UK investments and ensure their tax affairs are fully complete.

The document states:

“From 2016, HM Revenue & Customs (HMRC) is getting an unprecedented amount of information about people’s overseas accounts, structures, trusts, and investments from more than 100 jurisdictions worldwide, thanks to agreements to increase global tax transparency. This gives HMRC unprecedented levels of information to check that, as in most cases, the right tax has been paid.”

We came across an interesting case recently that highlights this. Mr S had lived in France for several years but had never fully declared himself resident. For general spending and obtaining cash in France, he used his UK bank’s debit and credit cards. He used a UK address for all his accounts and submitted a UK tax return each year. In his view, he wasn’t avoiding tax, but electing not to pay it in France.

He contacted us for help after he was approached by his bank. The bank advised that due to the nature of transactions on his account, they strongly suspected that he lived in France. They asked for his French address and tax identification number. They also stressed that failure to produce the information would result in further investigations being carried out.

This is just one example of how the financial world is working towards transparency. It is essential that your affairs are accurately declared and reported. Perhaps the starkest warning of potential consequences comes from HMRC themselves whose advice reads:

Come to us before we come for you.

It has never been more important to confirm your financial affairs are in order. With the right advice and planning, there are ways of making sure that your investments are not only tax compliant in France, but also tax efficient.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.