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FATCA reporting: What you need to know

Michael Foster summarises the UK reporting requirements for financial account information.

A number of automatic exchange of information agreements (AEOI) have been implemented in recent years, for the purpose of sharing financial account information between the tax authorities of countries to achieve greater global tax transparency.

Three of the international agreements create potential obligations for UK financial institutions to report to HMRC (under The International Tax Compliance Regulations 2015, SI 2015/878):

  • the UK/US Agreement, implementing the US Foreign Account Tax Compliance Act (FACTA);
  • the Common Reporting Standard (CRS); and
  • the Directive on Administrative Co-Operation (DAC).

The two latter initiatives have much in common, and the DAC effectively imposes the CRS in Europe.

Where reporting is required, it will result in detailed account information being provided to the tax authority in the account holder’s country of tax residence, including information about accounts held indirectly, such as through personal investment companies, trusts and other investment entities. The regimes also require the identification and potential reporting of natural persons who exercise control of the accounts, irrespective of whether they are direct account holders or controlling persons of entities that are not transparent for tax purposes.

This is an extract from an article in the February 2016 edition of TAXline, the magazine of the Tax Faculty.

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