Industry response

Our response to the HMRC consultation on implementing the common reporting standards

Executive summary

We support all efforts to counter global tax evasion and are pleased to see the issue high on the UK government agenda.  We believe that citizens, wherever they live, should pay their fair share of tax.  The same applies to entities.  But we are concerned that elements of the implementation of the common reporting standard go well beyond the initial objective. 

There is a view that HMRC wants to delegate more/ all of its customer information collection responsibilities to building societies (and banks).  We would oppose any move in that direction.  Not only is it unfair on building societies which have to pay for government twice – once in corporate tax and twice through considerable investment in, and maintenance of, information systems - but it is also grossly unfair on their members, the ultimate owners of building societies.  Such systems costs have a considerable impact on them, not only in the form of potentially lower savings and higher mortgage rates, but also in unnecessarily complex and lengthy onboarding experiences.  Very few society members live outside the UK (almost all those who do have moved from the UK after opening their accounts).  The vast majority of building societies open accounts only for UK resident individuals or trusts.   

One worrying consequence of delegating customer information collection to building societies and banks is that they are fined if they get HMRC’s job wrong – yet if HMRC has got the wrong customer information, or loses it, it is not penalised.

A huge challenge in implementing the global standard on the automatic exchange of information is the variations between FATCA, the crown dependency/ overseas territories intergovernmental agreements and the common reporting regime.  What to the outsider might be a minor change with seemingly trivial costs will almost always have a large resource impact for building societies (and banks).  This situation is compounded in societies that have several legacy systems.   Given the investment societies have already made in FATCA, we urge HMRC to keep the requirements as close to this as possible and avoid goldplating, such as the apparent move to verify taxpayer identification numbers.

Further complications are presented by the tight timetable.  Our members have other regulatory projects to plan and implement (let alone business-as-usual projects) and these can demand up to a year’s lead in times.  HMRC’s timetable makes such planning even more challenging.  We would prefer a proportionate solution that concentrated on genuine risk of tax loss – one immediate way to accomplish this would be to restore thresholds.

Click here to read the full response

Click here to read the consultation paper

Click here to read the policy brief

 

 

  • This document is tagged with:
  • FATCA