LDF clients must give ‘informed consent’ for e-mail communication
HMRC warns tax advisers over risk of e-mail communication
CLIENTS using the Liechtenstein Disclosure Facility (LDF) must give “informed consent” to their tax investigations specialists to communicate with HM Revenue & Customs via e-mail due to security concerns.
While a form 64-8 gives HMRC authority to communicate with a person’s appointed representative, it fails to cover the method that such communication should take. It is generally accepted that it covers letters and phone calls, but fears persist over the possibility that they can be intercepted, read and altered without either the sender or the recipient being aware.
As a result, HMRC has sent letters – seen by Accountancy Age – to tax investigations specialists advising that for all new registrations, communication via email that identifies the taxpayer will “only happen if [the] client has given their informed consent”. HMRC will also provide an accompanying form that can be used for that purpose.
HMRC said it hopes no additional burden is created following the decision.
The move is not intended to stop or affect clients already seeing their cases addressed via e-mail.
Watt Busfield founding partner Rebecca Busfield said: “Given the postal delays with HMRC correspondence, email correspondence is a great way of saving time and professional fees for the taxpayer. The email records are easy to store, find and locate through the use of key word searches.
“However there are risks and it is responsible of HMRC to bring this issue to the taxpayer’s attention. Another risk to HMRC of using emails would be accidentally typing in the wrong email address before pressing send. Tax advisers should also mention this risk in their engagement letters with clients. An alternative security measure could include password protected emails, which some international banks use.”
The LDF enables Britons to obtain a generous settlement with HMRC on any undisclosed tax liabilities held in offshore bank accounts, by rerouting funds through the tiny European principality. Originally due to end in March 2015, strong demand for the scheme saw it extended until 5 April 2016. The taxman announced restrictions to the service in August, which will see access to the kindest terms reduced.