HMRC has posted its international automatic exchange guidance on the government website, following another meeting held with STEP and charity advisors: International Exchange of Information Manual. The charity guidance will be posted within a week, the HMRC working group promises.
Attendees at the meeting discussed the mechanics of the due diligence process of charities in more detail; in particular, self-certification and tax residency. All beneficiaries and the gifts that they have received must be reported by a charity that is a Financial Institution (FI). Their name, payment and residency must also be reported, and there will be a tick box for UK residency.
In some scenarios, where charities are donating to the homeless and/or destitute, HMRC confirms that it will be difficult to obtain a self-certification of the beneficiary. In these circumstances, if the gift is being made in a reportable jurisdiction, the self-certification can be verified on a verbal basis. It can also be assumed that an apparently homeless person is tax resident in the country that they are present in at the time of the gift. No supporting documentation is required by HMRC if the question of residency appears acceptable, and adheres to a common sense ‘reasonableness’ test. Generally, no follow up of the beneficiary is necessary on this basis.
It is only necessary to acquire the beneficiary’s Taxpayer Identification Number (TIN) when they are resident in a country that provides them (Reportable Information: Tax Identification Number), and when it is reasonable to be able to acquire it. The tick box on the form for the TIN will be optional.
Gifts under approximately £100 (to be confirmed) are not reportable in non-reportable jurisdictions. Food and supplies that are donated are not reportable, and vouchers, whether cash or otherwise, are currently being considered.
HMRC confirmed that there will be a £300 fine for not submitting a report on time and a higher fine for delayed failure for a reporting entity. However, the £300 figure is currently under review and may be increased. There will be a £3,000 fine for an inaccurate report as a result of ‘deliberate behaviour’.
STEP’s meetings with HMRC are conducted on a monthly basis, however HMRC is to run more events with financial entities that will be affected by CRS (the OECD Common Reporting Standard) in order to provide further training.
In the meantime, we welcome any specific queries or input from practitioners which we will pass on to the working group for clarification. Please contact us at [email protected].
- See previous blog: CRS and charities: watch out for reporting obligations, 11 January 2016