They Already See the Account: Tax Advice After Automatic Exchange

Tax authorities already hold the account data of clients with money in several countries, so the risk has moved from a hidden account to a tax return that does not match the file. In 2024 alone, they automatically exchanged information on more than 171 million financial accounts with a total value of nearly EUR 13 trillion, according to the OECD Global Forum’s 2025 peer review of the standard. The EU Tax Observatory estimates that this exchange cut offshore tax evasion by a factor of about three in less than ten years. Since 1 January 2026, crypto platforms in the European Union and the United Kingdom have been collecting comparable data on their users’ transactions.

The account is not hidden. The authority holds its year-end balance and its gross figures, and a return that tells a different story is what triggers the letter. An adviser who can show a client what the authority sees, before the authority writes, is selling something the market needs and few firms name: order.

What lands on the authority’s desk

The Common Reporting Standard is precise about what a bank, custodian or insurer sends. Section I of the OECD’s consolidated 2025 text lists it: the holder’s name, address, every jurisdiction of residence, tax identification number, and date and place of birth; the account number; the balance or value at the end of the calendar year; for custodial accounts, gross interest, gross dividends, other gross income and the gross proceeds of sales; and the currency of each amount. When the holder is a passive entity, such as a holding company that earns mainly investment income, the same personal details go out for each controlling person. The peer review expects jurisdictions to complete each year’s exchanges within nine months of the end of the calendar year.

None of this is a tax computation. It is raw material, built on rules that differ from the rules of any tax return, and that is where honest clients get caught.

The last row is about to matter more. Under the amended CRS, the OECD commentary says dual resident individuals who are documented or re-documented “may not rely on tiebreaker rules and will be expected to declare all their jurisdictions of residence.” The Global Forum reports that 84 of 124 jurisdictions plan to start exchanging under the amended standard in 2027, a revision that also brings digital money products explicitly into scope. For a client who divides the year between two homes, both tax authorities may soon hold the same account.

The letter is a comparison, not a guess

The United Kingdom shows how the data gets used. The Chartered Institute of Taxation’s guidance to members, updated in September 2024, says HMRC’s offshore letters rest on information from exchange agreements, “including as a result of the Common Reporting Standard (CRS).” Before sending, HMRC “compared the information received under information exchange with the individual’s tax record and tax return(s).” CIOT concludes the letters are not speculative: HMRC is “only contacting taxpayers where they are unable to reconcile the figures.” The letter concedes there may be a reasonable explanation, notes that some people’s earlier tax advice has gone out of date, and generally allows 30 days.

CIOT also lists the innocent causes of a mismatch. The data often relates to a calendar year, which crosses two UK tax years. It does not arrive in a standard format. A return may show one global figure that HMRC cannot break down, or report income as one type when the overseas tax authority reported it as another.

Each letter carries a certificate of tax position. The recipient ticks one of four statements and signs that the information is “correct and complete to the best of their knowledge and belief,” with an acknowledgment that dishonestly making a false statement to evade paying tax is a criminal offence. CIOT points out what makes the form unusual. There is “no legal obligation” to complete it, its declaration applies to all tax years rather than one, and it has no de minimis level. HMRC has agreed to accept a letter instead. Silence is likely to bring a second letter and then, after further risk assessment, anything from a phone call to an enquiry or investigation.

The volume is steady. Freedom of information requests reported by RSM UK in July 2026 show HMRC’s Campaigns and Projects team issued 23,500 offshore nudge letters in 2023/24, 20,000 in 2024/25 and 20,678 in 2025/26 up to 19 February 2026. The same team received 5,372, 5,694 and 8,564 offshore disclosures across those three tax years. RSM says the gap between letters and disclosures “suggests a significant proportion had nothing to disclose,” while noting another reading, that up to 70 percent of recipients may be choosing not to disclose.

That is the market. Many recipients are not hiding anything. They hold a report that does not match their return, thirty days to answer, and a form whose declaration covers every tax year at once.

Crypto joins the file on a published calendar

Digital assets were the obvious gap in the file. It is closing on dates anyone can look up.

In the EU, DAC8 (Council Directive (EU) 2023/2226 of 17 October 2023) applies from 1 January 2026. The European Commission says reporting crypto-asset service providers collect data on all EU-resident users from that date, including residents of their own member state, and file the first reports “between 1 January and 30 September 2027”; exchanges for 2026 take place by 30 September 2027. Scope covers decentralised crypto-assets, stablecoins including e-money tokens, and certain NFTs. The report includes the “aggregate gross amount paid or received” for acquisitions and disposals and the fair market value of transfers.

In the UK, HMRC’s guidance says platforms submit their first report “between 1 January 2027 and 31 May 2027,” covering calendar 2026, and by 31 May every year after. The UK extended the rules to UK-resident users of UK platforms, so HMRC receives data on its own taxpayers as well as on foreigners (HMRC, November 2025).

Globally, the OECD commitment list updated on 14 September 2026 shows 46 jurisdictions undertaking first exchanges by 2027, 27 by 2028 and four by 2029.

The mismatch problem arrives with the data. A disposal total is not a gain, and each report covers one platform and one year. Take a client who bought on one exchange in 2021 and sold on another in 2026. The second exchange’s report shows the proceeds. The cost sits on a platform, and in a year, that the report does not cover. Someone has to put the two together, and it should be the client’s adviser, not the authority.

Discretion now means order

Discretion is the oldest word in private-client marketing. The word has not changed. What a client can reasonably buy with it has. The OECD counts more than EUR 135 billion in tax, interest and penalties raised through voluntary disclosure programmes and other offshore compliance initiatives since jurisdictions committed to the standard. The EU Tax Observatory’s central estimate is that about 25 percent of offshore household financial wealth still evades tax, where before 2013 the bulk of it did. Any line that implies a firm can keep a client out of view is now a claim a regulator, a journalist or the client’s own tax authority can test.

Every difference has a written explanation before anyone asks for one. Nobody at the authority has a reason to open the case. A firm can describe that plainly, and a careful client will pay for it, because it is the version of privacy that still exists.

In practice the vocabulary shifts. “Your affairs stay private” becomes “your affairs stay in order.” “Offshore” gives way to the names of the countries involved. And “we protect you from scrutiny” disappears in favor of “we know what is reported about you, by whom, and when.”

The discretion that holds up is quieter. The file and the return agree.

The product: we see what they see, before the letter

The core service is an annual reconciliation, run after year-end statements arrive and before the return is filed. For every account and platform, the firm rebuilds the report the authority will receive: which institution reports, to which country or countries, which fields, which figures, and by what date. It sets those figures beside the return, line by line, and writes a short note for every difference: the joint account, the pledged portfolio, the calendar-year split, the gross proceeds against the gain.

Two things make it sell. It is concrete, a document that looks like the authority’s view rather than a reassurance. And it produces the answer to a letter before the letter exists. Where HMRC accepts a written explanation in place of the certificate, the reconciliation note is most of that explanation already.

The response kit is the second product, for the client who receives a letter anyway. It holds a decision memo on whether to sign the certificate or answer by letter, drawing on the CIOT points about its scope; a draft reply built from the reconciliation; the 30-day window, with the extension request ready, since CIOT says HMRC will “tend to agree if reasonable”; and, if a real error surfaces, a choice of disclosure route, which CIOT notes need not be the Worldwide Disclosure Facility.

This dossier describes published reporting rules and market practice. It is not legal, tax or investment advice, and each client’s position depends on the law of every country involved.