Foreign Accounts Tax Compliance Act (FATCA)

by Tax Faculty Team on 21.12.2012 12:27

Still not ideal but more consultation

On 18 December HMRC issued draft Guidance Notes, draft Regulations and a Summary of Responses to the Consultation that ended in November and to which ICAEW Tax Faculty responded in TAXREP 60/12 Implementing the UK-US FATCA Agreement. HMRC has also issued an FAQ on Data Protection

In a posting a couple of weeks ago on FATCA we explained the background to FATCA and the developments at that date.

Comments on the draft Guidance and draft Regulations are requested by 13 February 2013.

The big win in the latest documentation is a clear statement that trusts will be Non Financial Foreign Entities (NFFEs) whereas previously we had been concerned that most trusts would be Financial Institutions (FIs). Trustees, however, remain FIs “if they are a remunerated independent legal professional or a trust or company service provider as defined in the Money Laundering Regulations 2007.” We think that will be challenging for a lot of small practitioners who are trustees to just a few trusts.

The other big issue concerns the need to get an annual valuation of the trust which could be expensive if the main asset is real property as it quite often is. 

We are working closely with STEP to get a more favourable outcome and we will be responding to the latest consultation before the 13 February 2013 deadline. 

If any readers have views on the latest proposals that they would like to be considered when finalising the Tax Faculty response then please get in touch with Ian Young ian.young@icaew.com