[Financial Services] FATCA Reporting Deadline - Less than 6 weeks to go
Definition of an FI
The term 'Financial Institution', encompasses a wide range of entities. An entity will be classified as an FI if it falls within the definition of one of four categories. These categories include depository and custodial institutions, investment entities and certain types of insurance companies.
Following the recent review of UK FATCA regulations, HMRC has decided to remove the category of holding and treasury companies from the definition of a Reporting FI. This is in order to align UK FATCA with the categories under Common Reporting Standards ('CRS') and other Automatic Exchange of Financial Information Agreements.
If you are affected by this change because you were originally classified under this category then please do get in contact with us to discuss the next steps.
Due diligence requirements
The detailed due diligence processes set out a methodical approach by which an FI will determine whether it has any Financial Accounts to report to HMRC.
The due diligence rules are detailed and complex. The due diligence procedures differ depending upon whether the account is held by natural persons or by an entity, and by reference to account values prevailing on specified dates.
An FI should have by now determined whether they have any Reportable Financial Accounts to report by 31 May 2015.
Practical reporting considerations
After registering with HMRC to use their online services, the Reporting FI must submit their Return via the Government Gateway.
The information can either be entered manually and multiple submissions made or the HMRC FATCA schema can be used to create your returns.
You must use the FATCA schema in circumstances where the account holder is a Non-Financial Foreign Entity ('NFFE') with more than 30 reportable controlling persons (for example, for some complex trusts/partnerships) or the account holder, or any controlling person of an NFFE, has multiple reportable tax residencies.
Reporting FIs with no Reportable Accounts
Following the recent consultation by HMRC on the CRS, HMRC have announced that Reporting FIs with no Reportable Accounts are no longer required to make nil returns to HMRC.
The requirement has been removed in order to remain consistent with CRS reporting requirements and to reduce the administrative burdens on both FIs and HMRC.
How Mazars can help
We have worked extensively with our clients to assist in the following areas:
- classification work to determine whether entities fall within the FI categories and the
- compliance obligations arising therefrom;
- updating of new client on-boarding (including amendment of account opening forms);
- due diligence procedures for pre-existing accounts; and
- reviewing and drafting of policies and procedures.
If you would like to discuss your readiness for FATCA reporting then please contact Ali Kazimi.