The UK, together with 48 other jurisdictions, started to exchange information under the Common Reporting Standard (CRS) for the first time last week. The UK is required to exchange information on an annual basis, commencing 30 September 2017. At present, 102 jurisdictions have signed up, or committed, to implementing the CRS and the remaining 53 jurisdictions are set to start exchanges in September 2018.
The CRS requires financial institutions to report information to local tax authorities on accounts held by non-resident individuals and entities (including trusts and foundations).
In the UK, financial institutions had to report relevant information for 2016 to HMRC for the first time in May this year. It is this information that will have been exchanged automatically by HMRC with other jurisdictions that have signed up to CRS. HMRC will also have received a large amount of data from other jurisdictions under the CRS and we understand that it has a significant team assessing how best to analyse and use the data received. Information on remittance basis users is likely to be of particular interest to HMRC.
Financial institutions are not under any obligation to notify clients that information will be disclosed or the content of the information disclosed. Therefore, taxpayers need to be aware of the type of information that is being exchanged with other jurisdictions and be prepared for an increase in enquiries from HMRC (or other tax authorities in other jurisdictions). For more information about the CRS, see Filippo Noseda's briefing
The action that HMRC will take in light of the data received remains to be seen.