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UK publishes final regulations for CRS automatic exchange of information

Thursday, 26 March, 2015

AEOI

The UK government has issued regulations allowing it to automatically exchange bank account information with other jurisdictions under its various international agreements.

The International Tax Compliance Regulations 2015 give effect to three separate international agreements:

  • the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information signed last October, implementing the OECD's Common Reporting Standard system (CRS);
  • the revised European Directive on Administrative Cooperation (DAC), which is essentially the embodiment of the CRS in European Law;
  • the UK's agreement with the US regarding the US Foreign Account Tax Compliance Act (FATCA). This part of the new regulations revokes the UK's original FATCA regulations enacted last year.

The new regulations – enacted as Statutory Instrument 2015/878 – grant HM Revenue and Customs powers to force UK financial institutions (FI) to disclose information about clients' accounts. This information will be forwarded every year to the other parties to these three agreements: these are the US; the 27 EU member states; and the non-EU signatories to the OECD CRS agreement, of which there are currently 65.

FIs will be required to carry out specified due diligence procedures to identify accountholders who are resident overseas. They will also have to determine each client's tax residency so that their bank account information can be forwarded to the correct jurisdiction.

In return HMRC will receive reciprocal exchange of information from the other signatory jurisdictions, which it will use to combat offshore tax evasion by UK resident taxpayers.

The regulations come into force on 15 April 2015. From 1 January 2016 UK FIs will be required to compile information about all bank accounts in existence as of 31 December 2015, and all new accounts opened on or after 1 January 2016, and from 2017 report it to HM Revenue and Customs.

  • A consultation was held before the regulations were drafted, with responses mainly coming from the financial sector. These responses will be published separately. According to HM Treasury, respondents were 'generally supportive of the government's aim to tackle offshore evasion and increase tax transparency through the use of automatic exchange of information, but wanted additional burdens from implementation of the DAC and CRS to be minimised'.

Sources