IEIM101300 - Exchange of Information: Key concepts: Foreseeable relevance

International exchange instruments provide for an exchange only where the information is “foreseeably relevant” to the administration or enforcement of taxes covered by the particular instrument.

Foreseeable relevance is one of the key concepts of information exchange. For a Competent Authority (IEIM101400) to send or request information, they must believe it to be foreseeably relevant; and for the receiving Competent Authority to accept the information or request, they must agree.

Meaning of foreseeable relevance

The standard of foreseeable relevance is intended to be interpreted broadly. The final decision on whether or not the information you want meets this standard rests with the UK Competent Authority; however, provided you can show that the information might be relevant to a UK tax liability, you can expect the Competent Authority to request that information for you and the receiving jurisdiction to accept it.

It does not have to be certain that additional tax will be due when the information is provided or that the information will be significant in calculating a customer’s liabilities (for example, information from overseas may establish that no additional tax liabilities exist). It does not need to be certain to provide a ‘smoking gun’, it simply has to be capable of having an impact on a tax liability.

There are some examples of meeting and not meeting the standard at IEIM101350. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

A common principle and interpretation

Most exchange instruments follow a common model and format, and share core principles. The OECD publishes a model Double Taxation Convention and model Tax Information Exchange Agreement, with commentaries that explain the meaning and intention of the various Articles (see IEIM210300 on the role of the OECD). The model and its commentary are intended to ensure that there is a consistent approach to applying these concepts around the world, and this includes the concept of foreseeable relevance.

“Necessary”

Some instruments, particularly older ones, instead rely on the term “necessary”. The OECD commentary makes it clear that the terms “foreseeably relevant” and “necessary” have the same meaning in this context.