Tax reports - giving your adviser the complete picture

Tax reports - giving your adviser the complete picture

Tax reports come in at this time of year – but here’s what they may not tell you about.


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The complete picture

It’s tax report season – but your reports may not include everything you need to tell HMRC about. We look at the information you should ensure your tax adviser is armed with.

It’s the time of year when many of our clients receive tax reports from their banks and wealth managers.

Tax reports contain information on your investments that you need for your tax returns. You may get several of them – your tax adviser will need all of them to accurately complete your return for the year to 5 April 2019.

However, your tax reports probably won’t be the only source of information your adviser requires.

It’s important to ensure your adviser has all relevant data on your financial affairs – for two reasons. Firstly, due to the global transparency of investments being driven by the Common Reporting Standard. And secondly, because reflecting some investment types accurately on your tax returns can be a complex task.

Not included?

A number of important items may not feature on your tax reports: for example, certain taxable foreign exchange transactions, and information relating to life insurance policies (investment bonds), spread betting, and gold or silver holdings.

In addition, data on private equity investments isn’t generally available by the time tax reports are compiled around May or June.

That’s because identifying the tax implications of returns from private equity investments is a complex exercise. The calculations involved are lengthy, and can only be done once the background documents are available – which themselves take time to compile.

Similarly, if you have offshore fund investments – such as iShares or other Exchange-Traded Funds (ETFs) – then Excess Reportable Income (ERI) may not be included.

ERI is made up of undistributed profits from certain kinds of offshore funds (known as ‘reporting funds’). These profits are liable for UK income tax, even though you haven’t yet received the distribution.

Information on ERI can be difficult to locate and calculate. Banks and wealth managers don’t always include it in the tax report. Some may provide ERI statements separately.

Make sure you give all of your tax reports to your tax adviser. Or if you’re completing your own tax return, you can find the relevant information on your funds at

Overseas reclaims

You’ll also need to look carefully at any investments in foreign stocks. Your tax report should include foreign dividends you’ve received, and the tax paid on them.

This is important not just for your tax return, but also as you may be due a reimbursement on overseas tax payments. Dividends from foreign stocks are often taxed at source, and then again in the UK. If that’s the case, then you may be able to claim back some or all of the tax paid abroad.

To make this happen, your tax adviser must:

  • have access to all relevant information on your foreign stocks
  • accurately assess your eligibility for any reclaims
  • follow the reclaim procedures correctly in each jurisdiction

Capital gains

Your tax reports will also feature a capital gains section. But again, not all investments liable for capital gains tax (CGT) may be included.

Gains from private equity disposals, over-the-counter (OTC) derivatives, FX trades, contracts for difference (CFDs), and structured products are likely to be omitted. (Investments held within ISAs are not subject to CGT.)

Your adviser will need to know if any of your portfolio is jointly owned – with your spouse, for example – as this affects your CGT liability. Investments aren’t always listed as joint on your tax report.

Again, you’ll need to make sure your tax adviser has all relevant information, about all of your capital gains. That includes any disposals outside of your investment portfolio, such as property, expensive artwork and antiques.

Words to the wise

There are two further considerations to keep in mind regarding your tax reports.

Firstly, be patient. Understandably, clients like to receive their reports soon after the end of the tax year, and get their tax affairs in order as quickly as possible.

But banks and wealth managers need time to process the necessary data, and make sure that the reports they issue are 100% accurate. Any errors on your reports could end up being reflected on your tax return, and lead to an unexpected tax bill – or worse, a hefty penalty for non-compliance.

Secondly, remember that your tax reports aren’t the be-all and end-all when it comes to compiling your tax return.

Don’t assume you can pass them on to your tax adviser and be done with it. Make sure your adviser has every document that could possibly be needed to file a complete and accurate return on your behalf.

In today’s climate of international tax transparency, discrepancies – deliberate or unintended – are more likely to be discovered; and the fines HMRC can impose for irregularities are higher than ever. The onus is on you to be certain that your tax return is correct.

KPMG’s experts can help ensure that your returns are fully compliant, and that information missing from your tax reports is acquired and accounted for. You can reach our tax team at:

Iona Martin
Head of Private Banking Tax
T- +44 (0)117 9054725

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