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HMRC have published legislation to allow businesses to comply with due diligence and reporting obligations under the accord between the UK and US governments to improve international tax compliance and implement the US Foreign Account Tax Compliance Act (FATCA).
The International Tax Compliance (United States of America) Regulations 2013 imposes new and substantial burdens on UK firms in identifying American taxpayers, and in reporting information to the Internal Revenue Service (IRS) in the States.
HMRC have published legislation to allow businesses to comply with due diligence and reporting obligations under the accord between the UK and US governments to improve international tax compliance and implement the US Foreign Account Tax Compliance Act (FATCA).
The International Tax Compliance (United States of America) Regulations 2013 imposes new and substantial burdens on UK firms in identifying American taxpayers, and in reporting information to the Internal Revenue Service (IRS) in the States.
The Data Protection Act 1998 prevents UK organisations from passing the required information directly to the US – which has led the government to introduce a process to allow UK financial institutions to comply with FATCA obligations without breaching data protection laws.
The measures – contained in the UK-US agreement – replace direct reporting with a mechanism whereby financial institutions register with the IRS but pass information to the Revenue, which forwards it to the US.
The changes reduce the overall costs to business of complying with FATCA and remove the threat of withholding being applied to UK businesses.
The regulations are expected to come into force in mid August and will have effect for financial accounts held at 31 December 2013.
