Wealth managers have only days to send clients warning letters about disclosing overseas assets to the taxman, or risk a £3,000 fine.
Wealth managers, advisers and fund managers have until 31 August to send an HM Revenue & Customs (HMRC) approved letter to clients about holding assets abroad which warns them that penalties are increasing for those who do not pay the right tax on offshore assets.
Financial institutions have to send the clients letters if they are UK tax residents in either the 2015/16 or 2016/17 tax year. Failure to send the letters could lead a penalty of £3,000 for the adviser.
‘Come to us before we come for you,’ says the template letter from the tax man.
‘You need to regularly check that you have declared all of your UK tax liabilities and, if needed, bring your tax affairs up-to-date. This is your responsibility. If you are confident that your tax affairs are up-to-date and complete, then you don’t need to do anything further.’
The letters are part of a global transparency drive by HMRC which it said is giving it ‘unprecedented information’ on people’s overseas accounts and investments in 100 jurisdictions globally.
‘If you have already declared all of your past and present income or gains to HMRC, including from overseas, you do not need to worry. But if you are in any doubt, HMRC recommends that you read the factsheet attached to help you decide now what to do next,’ the template letter says.
It also warns that penalties are increasing for those who do not declare the right offshore tax and could result in ‘potentially life-changing consequences’.
Tina Riches, a partner of Smith & Williamson, told the Financial Times: ‘We have ended up having to send them to almost everybody.’
Riches thought there would be millions of letters sent out as some people would receive them from more than one adviser.