Common Reporting Standards: FATCA
The International Tax Compliance Regulations 2015 (SI 2015/878) came into force in April this year which capture:
- The OECD’s Common Reporting Standards (CRS)
- The Directive on Administrative Cooperation (DAC) (2011/16) which implements the CRS in the EU
- The UK’s FATCA Agreement with the US
The effect will be to place obligations on financial institutions to exchange information on reportable accounts to other jurisdictions.
The concept will already be familiar to firms subject to HMRC’s FATCA obligations as well as the defined terms (CRS pages 29 and on) such as ‘Financial Institution’, ‘Reporting Financial Institution’, ‘Reportable Account’ etc. Having said that, a UK entity should in the first instance refer to SI 2015/878 for clarification of due diligence requirements, meaning of a reportable account etc, albeit that they will be referred back to the various agreements above.
With around 90 participating jurisdictions for the purposes of the CRS (see Schedule 1 of SI 2015/878) the agreement stretches further afield than the US (FATCA) and the EU (DAC) e.g. countries such Brunei Darussalam, Cayman Islands and Korea are CRS participants.
Aside from the existing FATCA requirements, the Regulations in respect of the DAC and the CRS have effect from 1 January 2016 in that the first reporting year for the latter two is the calendar year of 2016 (with a reporting deadline of 31 May in the following year).
HMRC has produced (draft) Guidance Notes (AEIM – Automatic Exchange of Information Manual) on the exchange of financial account information. HMRC has also updated its FATCA Guidance Notes, although sections of it have been incorporated into the AEIM. The table commencing on page 179 of the FATCA Guidance sets out what, and what hasn’t, been incorporated.