Top 10 FATCA/CRS reporting issues

Top 10 issuesWith reporting now underway in the UK for both FATCA (the US Foreign Account Tax Compliance Act) and the Common Reporting Standard (CRS), STEP has been liaising with HMRC on some of the more common reporting issues:

1. The financial institution (FI) has to re-register and is not able to view previous returns on the portal, because login details are unknown following staff changes.

Automatic Exchange of Information (AEOI) portal login details should be held securely and known only by those who need them. The FI should ensure that there is an appropriate procedure to maintain access to their portal. A pseudo email account might be an appropriate solution, providing the FI has robust security and data protection safeguards in place.

2. The FI misunderstands what constitutes an undocumented account.

HMRC has advised that FIs are wrongly reporting accounts as ‘undocumented’ when a self-certification requested from an account holder has not been completed. This has led to numerous accounts being erroneously reported with a GB resident country code. The definition of an undocumented account can be found at IEIM403100.

3. The FI makes a submission using the XML schema which is rejected due to inappropriate re-use of MessageRef, FIReturnRef and AccountRef.

The schema guidance gives comprehensive advice on use of references and can be found here.

4. The FI reports accounts where the account holder is not resident in a reportable jurisdiction.

Individuals who are not resident in a reportable jurisdiction (see IEIM402340) should not be reported. Some jurisdictions which have signed up to CRS are non-reciprocal, and some which have signed up are not yet ready to receive exchanges.

5. The FI reports accounts as being NPFFIs but resident country code is not US.

The term non-participating foreign financial institution (NPFFI) is for FATCA only, in respect of years up to 2016, and not applicable for CRS purposes. If used, the resident country code should be US.

6. The FI reports accounts that are excluded accounts and therefore non-reportable, such as registered pension schemes.

A full list of excluded accounts can be found at IEIM 401720.

7. The FI reports persons who are not reportable.

Under CRS, corporations with regularly traded stock and related entities are not reportable account holders, nor are governmental entities, international organisations, central banks or financial institutions. A list of exemptions to the term ‘specified US person’ under FATCA can be found in Article 1 (gg) of the UK-US Inter-Governmental Agreement (IGA).

8. The FI reports joint individual accounts as entity accounts.

A jointly-held individual account is not an entity account and the account information to be exchanged can be found at IEIM402140. However, partnerships, including general partnerships, are treated as entities, irrespective of their legal form (see IEIM400860).

9. The AEOI enquiry helpline is for financial institutions only.

HMRC requests that you don’t share details of the AEOI enquiry helpline with your account holders. This inundates its AEOI filing team and prevents it from being able to assist FIs with their reporting obligations.

10. The FI leaves filing to the last minute.

Filing submissions sufficiently in advance of the 31 May 2018 deadline allows FIs extra time to deal with any unexpected issues such as missing information, or inaccurate XML schema, that might lead to the submission being rejected.

STEP will continue to consult with HMRC on ongoing technical issues.

Emily Deane TEP is STEP Technical Counsel

The Gift Aid tax gap

Emily Deane TEPSTEP is working with HMRC on a Gift Aid working group set up to explore options to maximise the amount of Gift Aid that charities can claim on donations, together with ways of increasing customer understanding of the system and how it works. HMRC is also investigating opportunities to improve the way that Higher Rate Relief is claimed; and whether it works as intended, is future-proof and provides the relief in the best way possible.

HMRC began the process by instructing an external research company to look into charitable giving and the use of Gift Aid. Its specific objectives were to estimate the value of the Gift Aid tax gap and unclaimed Gift Aid, and develop an understanding of correct and incorrect behaviours among donors.

The report has found that 25 per cent of the value of donations made in the 12 months prior to interview did not have Gift Aid added to them where the donor was eligible, contributing up to GBP560 million to the value of unclaimed Gift Aid. This represents potential missed income for charities and is generated by eligible donors who only sometimes (30 per cent), or never (18 per cent), add Gift Aid to their donations. It is mostly driven by a lack of opportunity for donors to add Gift Aid, and to a lesser degree, by failing to understand what Gift Aid is, or where they are eligible to add it.

The report also finds that 8 per cent of the value of donations had Gift Aid incorrectly added to them by ineligible donors, generating a Gift Aid tax gap of up to GBP180 million. This is caused by ineligible donors who always (5 per cent) or sometimes (10 per cent) add Gift Aid, partly where they do not understand the relief, and partly where they misunderstand what it means to be a taxpayer. This has resulted in donors who are not taxpayers attempting to add Gift Aid, where they are not eligible to do so.

Better understanding of these issues would lead to a drop in Gift Aid claims among ineligible donors, and a rise in claims among eligible donors. It was recommended to provide information about (1) Gift Aid eligibility criteria (ie clarifying what it means to be a UK taxpayer, and that the donor must be one to add Gift Aid to their donation) at every opportunity, and (2) the benefits of Gift Aid at the point of donation; to help effect the change.

The report, Charitable giving and Gift Aid research, is published today, accompanied by a press release issued by HM Treasury and HMRC.

If you have any questions or suggestions please email STEP’s Technical Counsel – Emily.Deane@step.org.

Emily Deane TEP is STEP Technical Counsel

HMRC announces trustees, NOT agents, will be liable for penalties

HMRCUpdate 23 March: HMRC has updated its guidance to clarify that if a penalty is payable for late registration, it will be the burden of the lead trustee and not the agent.

We received the following communication from HMRC on 5 March 2018:

‘On 8 December 2017, HMRC announced that while the 31 January 2018 deadline for making a Trust Registration Service (TRS) return would remain in place, we would not charge a penalty if the lead trustees failed to register their trust on the TRS before 31 January 2018 but no later than 5 March 2018.

HMRC will not automatically charge penalties for late TRS returns. Instead we will take a pragmatic and risk-based approach to charging penalties, particularly where it is clear that trustees have made every reasonable effort to meet their obligations under the regulations. We will also take into account that this is the first year in which trustees have had to meet the registration obligations.

While our information suggests that most TRS returns have been filed, if you have not yet completed your TRS registration(s), you should do so as soon as possible.

When penalties can be issued

Penalties can be charged for administrative offences relating to a relevant requirement.

These are:

• a requirement to register using the TRS by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income and
• a requirement to notify any change of information by the due date of 31 January after the end of the tax year in which the trustees pay tax on trust assets or income.

The administrative offences penalty

HMRC will charge a fixed penalty to reflect the period of delay:
• Registration made up to three months from the due date – £100 penalty
• Registration made three to six months after the due date – £200 penalty
• Registration more than six months late – either 5% of the tax liability or £300 penalty, whichever is the greater sum.

There is currently no facility to notify HMRC of any change of information online and, as such, we will not charge penalties for a contravention of this requirement until the online function is available.

A penalty will not be payable if we are satisfied you took reasonable steps to comply with the regulations.

HMRC also has the power to apply a penalty for money laundering offences under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017/692.

These offences are more serious than administrative offences. HMRC will not bring these penalties in immediately. HMRC will consult on the structure of these penalties later this year, to ensure the penalty regime is fair and proportionate whilst cracking down on money laundering offences.’

It had been unclear, following this communication, whether the penalties would apply to the person dealing with the trust’s registration affairs, whether that be the lead trustee or the agent. HMRC has now confirmed that the lead trustee will become liable for the penalty, and not the agent.

HMRC has also confirmed to STEP that in scenarios where trusts have an income tax or CGT liability for previous years but are not registered for self-assessment then trustees do not need a Unique Tax Reference for this process, and HMRC recommends that the trustees submit an IHT100 as soon as possible.

Emily Deane TEP is STEP Technical Counsel

STEP joins industry roundtable for Law Commission Q&A on wills

Emily Deane TEPSTEP was pleased to attend the latest Today’s Thought Focus Roundtable, hosted by Today’s Wills & Probate on 15 November 2017.

Prof Nick Hopkins and Spencer Clarke from the England & Wales Law Commission attended, and gave participants the opportunity to discuss its latest wills consultation.

The consultation paper contains 14 chapters and 64 questions, with varying proposals for reform. The most pertinent issues facing STEP members are the review of testamentary capacity, statutory wills, supported will-making, formalities, electronic wills, the protection of vulnerable testators, and interpretation and rectification provisions.

Key reforms that members welcome are:

• Modernisation of the language to make it more accessible to the public.
• An alignment between the Mental Capacity Act 2005 and the Banks v Goodfellow test.
• Improving the statutory will application process to further protect elderly or frail testators.
• The implementation of supported will-making, provided that accredited individuals are used and the proper safeguards are incorporated.
• Enhanced protection measures for vulnerable testators.

The Commission confirmed that 177 responses have been received in response to the consultation, which concluded on 10 November 2017. More than 30 of these are thought to be from members of the public.

Prof Nick Hopkins commented: ‘This roundtable event, bringing together a diverse group of those involved in the writing of wills, will be very helpful for us in ensuring that our proposals for reform are grounded in the experience of those making a will, and engage with real-life concerns.’

The Law Commission will be analysing the responses in the coming months and will collate them into a report. In the meantime, it anticipates forming small working groups representative of the industry to focus on various areas of the draft legislation. It is hoped that the official report will be released by the end of 2018.

STEP will continue to keep you updated on this area of reform.

Emily Deane TEP is STEP Technical Counsel

Proposed EU rules for tax planning intermediaries

European flags in BrusselsIn June 2017 the European Commission published draft legislation containing new rules for tax-planning intermediaries who design or promote cross-border tax planning arrangements. The stated objective is to identify and assess schemes that are potentially facilitating tax evasion or avoidance in order to block harmful arrangements in the early stages.

The proposals require intermediaries to report details of any arrangement that features defined ‘hallmarks’ (outlined below) to their own tax authority within five days, beginning on the day after the arrangement was made available to the taxpayer.

The new proposals are an amendment to the Directive for Administration Cooperation (DAC) and will be submitted to the European Parliament for consultation and subsequent adoption. It is anticipated that they will take effect on 1 January 2019.

Intermediaries

‘Intermediaries’ has a wide definition within the proposals and is described as anyone ‘designing, marketing, organizing or managing the implementation of the tax aspects of a reportable cross-border arrangement, or series of such arrangements, in the course of providing services relating to taxation.’

An intermediary could be a company or professional, including lawyers, tax and financial advisors, accountants, banks and consultants. An advisor who deals with any type of direct tax such as income, corporate, capital gains, inheritance tax, etc, will fall into the reporting remit.

Hallmarks

A tax-planning arrangement will be considered reportable if it features a ‘hallmark’ that is defined within the Directive, and the onus will be on the intermediary to report it. These hallmarks are considered to be characteristics within a transaction that may enable the arrangement to be used to avoid or evade paying taxes.

If one of more of the following hallmarks is identified then the arrangement must be reported:

• A cross-border payment to a recipient in a no-tax country.
• Involvement with a jurisdiction with weak or insufficient anti-money laundering legislation.
• An arrangement set up to avoid reporting income in accordance with EU transparency rules.
• An arrangement set up to circumvent EU exchange requirements for tax rulings.
• If it has a direct correlation between the fee charged by the intermediary and the amount that the taxpayer will save in tax avoidance.
• If it does not ensure that the same assets benefit from depreciation rules in more than one country.
• If it does not enable the same income to benefit from tax relief in more than one jurisdiction.
• If it does not respect EU or international transfer pricing guidelines.

Reporting

The Member State in which the arrangement is reported must automatically share the information with all other Member States via a centralised database on a quarterly basis. The information needs to be completed using a standard format, which will require details of the intermediary, the taxpayer and the scheme being recommended. Member States are obliged to implement proper penalties if intermediaries fail to adhere to the reporting requirements, and each Member State has to enforce its own national sanctions.

Objective

Some Member States already have mandatory reporting requirements in place for intermediaries, such as the UK, Ireland and Portugal. The reporting requirements are designed to assist Member States in closing loopholes when it comes to tax abuse as well as deterring the use of aggressive tax planning schemes across the EU.

STEP will continue to monitor developments in relation to these new measures, and will inform members of any new information as soon as it is released.

Emily Deane TEP is STEP Technical Counsel

STEP members input into reform of the law of wills

doctor with patientEarlier this week STEP held the second of three consultation events on the reform of the law of wills in England and Wales. Law Commission representatives Dr Nick Hopkins and Spencer Clarke invited feedback from STEP members in England and Wales on key areas of the consultation including, capacity, statutory wills, formalities, electronic will-making, protecting vulnerable testators and revocation.

At both events, practitioners raised substantial issues relating to the review of the test for capacity to make a will under Banks v Goodfellow (1870), the review of the formality rules, the introduction of court dispensing powers and further possible protection measures for vulnerable testators.

Some particularly pertinent questions that initiated discussion amongst members at the events were:

• How can the Golden Rule (where the making of a will by an elderly or ill testator is witnessed or approved by a medical practitioner who is satisfied of their capacity) be improved?
• Should the Wills Act adopt the Mental Capacity Act 2005 for decisions regarding testamentary capacity?
• Could other professionals such as psychiatrists assess capacity, not just medical practitioners?
• Should the ‘attestation’ requirement be removed?
• Should a dispensing power be introduced to allow judges to override a will formality that has been overlooked, for example, missing witnesses?
• Should the marriage revocation clause be reconsidered or removed?
• Is there scope for expanding the undue influence doctrine, in order to further protect vulnerable testators?
• Could there be more clarity separating the concepts of undue influence, and knowledge and approval?
• Have nominations been taken into consideration, particularly considering they require far less formalities than wills?
• Do domicile and residence issues need to be considered, including how the new rules would operate within other jurisdictions?

Members note that these roadshow type events are invaluable in the consultation process. The Commission, in turn, has been pleased with the response from members at both events.

Following the consultation deadline on 10 November 2017 there will be an analysis stage, after which a report and impact statement will be published by the Commission and subsequently a draft Bill.

Spaces are still available at the Manchester event on 18 October at Mills & Reeves LLP.

If your firm is unable to attend a consultative event, but would like to submit some feedback on the consultation to be incorporated into STEP’s consultation response, please contact emily.deane@step.org by 30 October.

Emily Deane TEP is STEP Technical Counsel

Trustees, have you got your LEIs?

Emily Deane TEPThe Global Legal Entity Identification Foundation (GLEIF) has designed a system whereby every ‘legal entity’ will need to register and obtain a unique identification number – a Legal Entity Identifier (LEI) when new European legislation, the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR) takes effect in the UK.

If the entity does not obtain an LEI it will not be able to trade on the financial markets in the UK after 3 January 2018.

The London Stock Exchange (LSE) requires investors who are deemed to be legal entities to obtain the LEI, which is a 20-character alphanumeric reference code unique to the legal entity.

Legal entities include trusts, companies (public and private), pension funds (but not self-invested personal pensions), charities and unincorporated bodies that are parties to financial transactions. If the LEI has not been obtained by 3 January 2018, the investment firms will not be able to meet their obligations and provide the legal entity with investment services.

What is the purpose of LEIs?

All LEI data will be consolidated in one database in an effort to improve global entity identification and standardisation, which will enable regulators and organisations to measure and manage counterparty exposure. In addition it will enable every legal entity or structure with an LEI to be identified in any jurisdiction. Once the legal entity has the LEI, it will be required to quote it to the requisite service provider when it enters into a reportable financial transaction. Every financial transaction will require sight of the LEI in order for it to be processed.

Do trusts need one?

The regulations require trustees who are using capital markets in relation to trust funds to obtain the LEI for the trust. We understand that bare trusts may have been excluded from the requirement to obtain an LEI (depending on whether the firm classifies bare trusts as legal entities or as individual/joint accounts) but all other trusts will be obliged to obtain one if they are parties to financial transactions.

In the case of discretionary trusts which have legal restrictions and cannot disclose trust details, the LSE will accept a validation from the trust itself, and will not require sight of the trust deed. However, in all other cases the LSE will generally accept a scanned copy of the first couple of pages of the trust deed in the same way that many banks do for AML compliance. Entities other than trusts are obliged to provide information such as their official registry details and business address.

Issues around trusts

When you apply for the LEI you will be asked to reference the source of its identity, such as Companies House if it is a company registered there. However, there is no equivalent register for trusts. It may be possible to use the trust’s Unique Tax Reference (UTR) from HMRC’s tax return to identify it. This would appear to be a sensible approach for the purpose of minimising the number of LEIs for a trust with multiple funds; however some larger trusts may apply for an LEI covering all of the sub-funds regardless of the UTR. There is still no guidance available on this point.

Renewal

Every entity will be required to renew its LEI on an annual basis and there will be a charge for renewal. To renew your LEI you must provide the Local Operating Unit with updated information, so that it may verify the data held.

However the FCA update dated 2 August 2017 clarifies that the requirement under MiFID II to renew the LEI on an annual basis applies to firms that are subject to MiFIR transaction reporting obligations, and in the UK, under our implementation of MiFID II, to UK branches of non-EEA firms when providing investment services and activities.

This recent update clarifies that trusts will not need to renew their LEIs on an annual basis unless they want to continue undertaking financial transactions.

What if I don’t apply?

If the LEI has not been obtained by 3 January 2018, investment firms will not be able to provide the legal entity with investment services. The legal entity itself is ultimately responsible for obtaining the LEI, but some investment firms may agree to apply for the LEI on behalf of their legal entity clients. The LSE has produced a draft format which will be acceptable in order to transfer the application authority from the entity to a third party such as a management company, if preferred.

Registration information

Each Local Operating Unit (LOU) may charge a fee for arranging the LEI and the fee may variable at each Operating Unit. You can find a LOU on the GLEIF website.

For more details on how to request your LEI, see the guides:

Quick User guide (pdf)
Full LEI User Guide (pdf)

It is widely acknowledged that guidance is lacking in this area, and the private client sector is keen to see some more prescriptive guidance in relation to trusts before the end of the year.

Emily Deane TEP is STEP Technical Counsel

Will-writing reforms proposed

Signing Last Will and TestamentThe Law Commission of England and Wales is holding a public consultation on reform of the law of wills. The current law, largely derived from the Wills Act 1837, is understandably antiquated and requires an overhaul. The Commission notes that 40 per cent of people in England and Wales die without leaving a valid will, which often results in application of the unfavourable laws of intestacy.

Background

Significant changes in society, technology and medicine have prompted the Commission to review the wills law. Some of these factors include:

• the ageing population;
• the greater incidence of dementia;
• the evolution of the medical understanding of disorders, diseases and conditions that could affect a person’s capacity to make a will;
• the emergence of, and increasing reliance on, digital technology;
• changing patterns of family life – for example, more cohabiting couples and more people having second families; and
• with more people having substantial amounts of property, clarity about what happens to it after death being more important than ever.

Objectives

The Commission’s objective is to modernise and improve the current, archaic wills law. Some of the key focus areas include:

More flexibility: This would enable courts, when it is clear what the deceased wanted or intended, to dispense with the formalities of a will. If a particular formality, such as having two witnesses sign the will, had been overlooked or incorrectly administered, new ‘dispensing powers’ would enable the court to validate the will.
Capacity review: It may be necessary to improve the test for capacity to reflect the modern understanding of medical conditions such as dementia. This review could result in the introduction of a new test specifically linked to these conditions, where the testator makes a will with specific new guidance and support.
Statutory guidance: It may be necessary to introduce statutory guidance for doctors and other professionals when assessing whether or not a person has the required mental capacity to make a will. This could reduce the need for lengthy, costly litigation.
Undue influence: New rules should be considered to protect testators from being unduly influenced by another person. In particular, elderly and vulnerable testators should be better protected from fraud.
Testamentary capacity: Lowering the age at which a will can be made from 18 years old to 16. A child of 16 or 17 might have significant assets that he or she may not want to pass to an estranged parent under the rules of intestacy.
Electronic wills: It may be necessary to review how technology can be adapted in relation to making a will; it may become easier, cheaper and more convenient to a testator if they are able to do so electronically, though some practical challenges will need to be considered.
Ademption: The Commission would like to encourage discussions as to whether or not the ademption rules need to be reviewed. The rules could be improved to better align the testator’s wishes and intentions with the operation of the law.

Consultation events

STEP is working closely with the Law Commission and the Association of Contentious Trust and Probate Specialists (ACTAPS) on this consultation project. STEP is hosting free consultation events in London, Newcastle and Manchester, and STEP members are invited to provide feedback to Commission representatives.

Consultation event schedule:

London, 13 Sep
Newcastle, 18 Sep
Manchester, 18 Oct

The consultation closes on 10 November 2017, and the Commission’s conclusions, along with its final recommendations and a draft Bill, are expected to be published in early 2018.

Emily Deane TEP is STEP Technical Counsel

Are you prepared for the UK’s new corporate criminal offence?

HandcuffsSTEP advised members earlier this year that the Criminal Finances Act 2017 received Royal Assent on 27 April 2017. The Act contains the new corporate criminal offence of ‘failure to prevent the facilitation of tax evasion’, which is anticipated to take effect in September 2017.

Even though tax evasion and facilitation of tax-related crimes are already criminal offences, it has previously been difficult to pin these offences on a corporation or partnership such as a law firm. The new legislation will create a liability on the employer for the actions of its employees and ‘associated persons’ who knowingly facilitate any tax evasion. The definition of ‘associated person’ is very wide in scope and will include employees, partners, consultants and also agents and anyone performing services for or on behalf of the company or partnership.

The Act applies to LLPs and partnerships as well as companies. It does not alter what is criminal but who should be liable for the criminal act.

There are three elements to the new offence:

1. The criminal UK or non-UK tax evasion by a taxpayer under the current law.

2. The criminal facilitation of this offence by an associated person acting on behalf of the company.

3. The company failed to prevent the associated person from committing the criminal act at stage two.

The legislation creates two new offences – a UK offence and an overseas offence. If a UK tax offence is committed then it is irrelevant if the company or associated persons are not UK-based. In accordance with the new legislation, the offence will have been committed and can be tried in the UK courts. This stance reinforces the UK’s position that any individual can be guilty of a UK tax evasion offence, regardless of their location, if they assist someone else to evade UK tax.

If non-UK tax is evaded then the company will be liable for the offence if they have a place of business in the UK, or if any of the facilitation took place in the UK.

Defence

There will be a defence available if the employer put in place reasonable prevention measures, but otherwise the offence is strict liability, and the employer may face criminal prosecution, financial penalties and reputational damage. A reasonable prevention procedure is one that ‘identifies and mitigates its tax evasion facilitation risks’ which will make prosecution more unlikely.

Advice for members

HMRC’s draft guidance dated October 2016 provides six guiding principles that companies should consider when interpreting the new legislation:

Risk assessment

Companies should assess their own risk exposure level in relation to their employees engaging in the facilitation of tax evasion in the course of business. The guidance notes that the bodies most affected by the new offence will be those in financial services, including the legal and accounting sectors. These bodies are advised to review the following additional guidance: The Financial Conduct Authority’s (FCA) guide for firms on preventing Financial Crime, the Law Society’s Anti Money Laundering Guidance, particularly Chapter 2 and the Joint Money Steering Group (JMLSG) guidance.

Proportionality of risk-based prevention procedures

It is anticipated that relying upon existing in house anti-money laundering procedures will not be sufficient to satisfy the defence of having prevention procedures in place. The guidance explores some of the varying common elements that would be considered to be reasonable prevention procedures.

Top level commitment

The top level management of each company should be committed to raising awareness and establishing safeguards intended to prevent the facilitation of tax evasion amongst its employees. Procedures include communication and endorsement of the new legislation within the company, as well as development and review of prevention procedures.

Due diligence

The company should mitigate any risks that it identifies by way of applying advanced due diligence procedures. The guidance notes that bespoke financial or tax related service companies will face the greatest risk, and that merely applying existing procedures will not be an adequate response to mitigating their exposure. New procedures are expected to be applied clearly in conjunction with the new legislation.

Communication (including training)

The company must ensure that its new prevention procedures are widely communicated and understood through internal and external communication with all employees. This communication may vary depending upon the size of the company, however training must be provided, and a zero tolerance policy for facilitation of tax evasion and its consequences must be properly communicated.

Monitoring and review

The company must put in place ongoing monitoring mechanisms and reviews to ensure that the system is effective, and it must make improvements where necessary. The company may choose to have reviews conducted by internal or external parties.

While HMRC’s guidance contains some useful terminology and case studies, it is recognised that further guidance is needed in this area. We understand that HMRC is working with industry bodies to support them in producing more specific guidance and STEP will keep you updated accordingly.

Emily Deane TEP is STEP Technical Counsel

Information exchange reporting FAQs

Emily Deane TEPWith reporting now underway in the UK for both FATCA and the Common Reporting Standard (CRS), STEP has been liaising with HMRC on some of the finer points of reporting.

Can I still submit CRS amendments?

There is some time available following the 31 May 2017 deadline for submission of amendments or corrections. If you need to submit an amendment within the first few weeks of filing then HMRC should be able to include the amendments in the first exchange scheduled for 30 September and the information will be sent to the relevant jurisdiction.

What are the penalties for late CRS reporting?

HMRC has confirmed that they will take a soft approach towards penalties in the early stages of CRS (like FATCA, the US Foreign Account Tax Compliance Act ) – particularly if there are CRS system errors that incur late filing. However, a harder approach may be taken towards people who are deliberately negligent with their filing.

FATCA: what do I do if a US TIN is unavailable?

It has previously been identified that in some cases a nine-zero approach will be accepted when a TIN (Taxpayer Identification Number) is unavailable. Some accounts are being filed with missing TINs which causes difficulties because the system will respond that it has been submitted in an incorrect format. The ‘missing TIN’ cases are inevitably causing issues for users and HMRC and HMRC is waiting for feedback from the IRS later this year on how to resolve it. It may be deemed acceptable that the nine-zero approach continues in the short term.

I have received a FATCA renewal message, what do I do?

If you have received a FATCA renewal message for an FI (Financial Institution) from the IRS then you will need to login, check that renewal is not required and confirm that. For further information see p 84 of FATCA Online Registration, which says ‘FIs notified of the potential need to renew their agreement should login to the FATCA Online Registration System and view the ‘Renewal of FFI Agreement’ page … FIs must determine if they need to renew their agreement and then must submit their determination … All FIs should follow steps 1 through 4 below to determine if they must renew their agreement’.

What is the deadline for client notification?

The UK Client Notification Regulations came into force on 30 September 2016. The obligation for practitioners to notify any clients with offshore accounts and assets that HMRC will soon begin to automatically receive data from over 100 jurisdictions relating to UK tax residents and their offshore accounts, in accordance with the UK’s automatic exchange of information agreements, must be met by 31 August 2017. See this STEP blog for more information.

STEP will continue to consult with HMRC on ongoing technical issues.

Resources:

Emily Deane TEP is STEP Technical Counsel