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Trusts with no US Reportable Accounts need not file 'nil returns' with HMRC under FATCA

Thursday, 12 March, 2015

HMRC

STEP understands that after considering industry representations on the issue HMRC has decided to drop the requirement for UK Financial Institutions (FIs) (which include many trusts) with no US Reportable Accounts to file 'nil returns' with HMRC under the US Foreign Account Tax Compliance Act (FATCA).

This does not remove the obligation on trusts which fall into the FI category to ensure that they have met their obligations to register with the US Internal Revenue Service (IRS) or the requirement to conduct due diligence to ensure that there are no US Specified Persons among the Controlling Persons connected with the trust or US Reportable Accounts.

The UK tax authorities will be using the IRS list of registered FIs as the basis for its compliance assessments rather than the nil returns.

Anyone who has already filed a nil return need take no further action. These returns will not be passed on to the US. It should be noted that nil returns were not, in any case, required for the Crown Dependencies’ and Overseas Territories' (CDOT) agreements (also known as UK FATCA) or the OECD's Common Reporting Standard agreements.

The deadline for reporting US Reportable Accounts to HMRC remains 31 May 2015.

George Hodgson, STEP's Deputy Chief Executive said 'Very few UK trusts will have US Specified Persons or US Reportable Accounts. Moreover registering and filing a nil return on the HMRC website was proving a far from entirely smooth process for practitioners given various software limitations in the process. HMRC's move on nil returns, which has been agreed with the US, is therefore extremely welcome. It does, of course, not impact on the obligation to register with the US authorities if the trust qualifies as an FI and also the obligation to conduct due diligence to establish that there are no US Specified Persons connected with the trust. Similarly trusts that are NFEs, while not needing to register with the IRS, will still be subject to due diligence by the FIs they interact with.'