United Kingdom

Details

  • Service: Tax
  • Type: Press release
  • Date: 04/06/2013

FATCA: KPMG welcomes revised draft UK guidance 

 

HMRC has published updated regulations and guidance on the implementation of FATCA* in the UK. The documents came out late on Friday 31 May and are available at http://www.hmrc.gov.uk/fatca/index.htm.  While the regulations are close to being final, HMRC has indicated that it will continue to accept comments for the next few weeks. In addition, HMRC is looking to publish an updated Annex II, which includes a list of entities and products that are considered out of scope of FATCA, soon.

 

Commenting on the revised draft UK guidance on FATCA, Jennifer Sponzilli, seconded US Tax Partner - KPMG LLP, said: “The revised draft UK guidance on FATCA goes a long way towards harmonizing the rules and definitions governing what entities are in-scope as ‘financial institutions’ with the final US Treasury regulations. In particular, holding companies and treasury centres of groups that include financial institutions generally are now financial institutions themselves, just as they are under the US Treasury regulations. However, the inclusion of these entities has not been incorporated by the updated model 1 intergovernmental agreement.

 

“The revised draft UK guidance also integrates many more exceptions on deemed-compliant entities found in the US regulations, such as owner-documented financial institutions and sponsored investment entities. However, certain additional exceptions, such as those for investment advisors and investment managers provided in the updated model 1 intergovernmental agreement, have yet to be incorporated. Guidance on these exceptions needs to be provided very soon, as many UK-based groups are currently determining which of the entities within their group need to register with the U.S. Internal Revenue Service as financial institutions.

 

“The revised draft UK guidance provides clarification that certain types of accounts, such as accounts of deceased persons and certain escrow accounts held by solicitors, etc., are not financial accounts for purposes of FATCA and are therefore not subject to the due diligence and reporting requirements.

 

“The revised due diligence obligations generally require UK financial institutions to establish arrangements to identify ALL the jurisdictions in which an account holder is a tax resident, not just whether the account holder is a US person. As a result, UK reporting Financial Institutions (FIs) are empowered to implement procedures that would allow them to satisfy their obligations not just under FATCA but also under other similar agreements that the UK may enter into with other jurisdictions.

 

“The obligation of a UK financial institution to identify and report certain payments, including non-US source payments, made in 2015 and 2016 to non participating Foreign Financial Institutions (FFIs) has been the subject of much discussion and concern because of the burden it imposes. The revised draft UK guidance helpfully limits the types of payments that are in scope.

 

“The revised draft UK legislation and guidance incorporates additional rules on due diligence from the US Treasury regulations, governing situations where accounts are acquired as a result of a merger or when pre-existing documentation would suffice for documenting a new account opened by the same customer, that UK financial institutions may find to be beneficial.”

 

Ends-

 

For further information please contact:

 

Margot Cowhig, KPMG Corporate Communications

Tel:  0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk

 

KPMG Press Office: 0207 694 8773

 

Notes to editors.

 

* The Foreign Account Tax Compliance Act (FATCA), which is part of the US Hiring Incentives to Restore Employment Act of 2010, aims to combat tax evasion by US tax residents using foreign accounts

 

 

About KPMG LLP

 

KPMG LLP, the audit, tax and advisory firm (www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International").  KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.

 

 

Share this

Share this