Implementing the United Kingdom’s Agreements with the Crown Dependencies and Gibraltar to Improve International Tax Compliance


13 January 2014

Dear Charlotte

Thank you very much for offering us the opportunity to comment on the draft regulations, and on the draft tax information and impact note.  I should also like to thank you and your colleagues for engaging with our sector on the forthcoming legislative requirements.

We have no comments on the regulations themselves but do have some on the response document.  Many important areas are still to be decided; this ongoing delay is unhelpful for industry which has limited staff and IT resources to implement changes.  Most projects require a lead in of at least a year.  This is particularly pertinent for smaller institutions such as building societies which have to use third parties for development – any work that has to be installed in a short time is naturally more expensive than that which can be scheduled more flexibly.  It is worth bearing in mind that any data these smaller mutuals may generate is often minimal and will not increase tax take.

1. Communication with industry

How HMRC will publicise changes to UK CD reporting pending changes to the US FATCA regulations are still to be decided.  We urge HMRC to put communication higher up its agenda.  At present the FATCA part of the website is merely a list and does little to help institutions find what has changed.  At the very least an alert system should be developed.

Just as important, is interaction with individual customers.  Very soon, our members will be asking questions on tax residence of customers that may lead to further questions.  Our members will be unable to help as they, of course, do not provide tax advice.  Customers unsure of their tax residence status should be able to find the answer from HMRC but no such service currently exists.  It should, and soon.  Lack of such a basic service could inadvertently harm the relationship between our members and their customers.

2. Identification of the Account Holder as a Specified person

We note in the response to question 7 on page 12 of the response document that HMRC has changed this to “Identification of the Account Holder as Tax Resident in the Other Party” and is working on guidance.  We cannot stress enough how urgent this guidance is.  To implement the appropriate systems and submit meaningful data, our members need to know now how to identify the correct person.

3. Schema

We are concerned at the delay in the development of HMRC’s IT system for UK reporting that is to be published “as soon as possible”.  Such a vague statement is unhelpful.  In particular, smaller institutions that have been drawn into CD/ OT reporting have to have certainty now; any major changes - as these are - have to be approved by boards before even considering how best to finance/ implement them.

4. Operational detail

a. We still seek clarification on the foreign exchange rate to be used (whether it should be the rate appropriate to the date of closure [or whether one annually chosen rate could be applied]) when aggregating accounts to determine whether closed accounts were reportable.  This question was first raised on 1 November 2013.

b. Under both the TDSI and ISA regulations, BFPO addresses are treated as UK addresses.  We suggest the same should apply in CD OT (and US FATCA) reporting, and should be made explicit in the guidance.  Anything different would be administratively burdensome given there is no indication of country in the BFPO address.  

5. Tax Information and Impact Note

The CD/ OT regulations are not expected to have an impact on tax compliant individuals and households.  This is not wholly correct.  Changes to onboarding (and any remedial back book work) may affect such individuals’ experience of UK financial institutions.  There is a slim chance they may reject, for example, opening/ moving a savings account on account of the apparent bureaucratic hurdle.  That would not be consistent with the policy of encouraging a savings culture.

Yours sincerely


Andrea Jeffries

Policy Adviser