The International Tax Compliance Regulations 2015

Made: 24th March 2015

Laid before the House of Commons: 25th March 2015

Coming into force: 15th April 2015

The Treasury make these Regulations in exercise of the powers conferred by section 136 of the Finance Act 2002 and section 222(1), (2) and (3) of the Finance Act 2013 :

Introductory

Citation, commencement, effect and interpretation

1

• (1) These Regulations may be cited as the International Tax Compliance Regulations 2015 and come into force on 15th April 2015.

• (2) These Regulations have effect for and in connection with the implementation of obligations arising under the agreements and arrangements listed in paragraph (3) and apply separately in relation to each of those agreements or arrangements except where the context otherwise requires.

• (3) The agreements and arrangements are—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (aa) the OECD (2014), Standard for Automatic Exchange of Financial Account Information in Tax Matters as amended by the 2023 update to the Common Reporting Standard contained in the OECD (2023), International Standards for Automatic Exchange of Information in Tax Matters: Crypto-Asset Reporting Framework and 2023 update to the Common Reporting Standard, including the commentary (the “CRS”);

• (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (c) the agreement reached between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America to improve international tax compliance and to implement FATCA, signed on 12th September 2012 and amended in June 2013 and February 2019 (“the FATCA agreement”).

• (3A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4) These Regulations have effect from—

• (a) 1st January 2016 in relation to ... the CRS, and

• (b) 15th April 2015 in relation to the FATCA agreement.

• (5) In these Regulations, a reference to “relevant agreement” means such agreement or arrangement referred to in paragraph (3) as the context requires, as that agreement or arrangement has effect from time to time.

• (5A) For the purposes of these Regulations—

• (a) “financial institution” has the same meaning in relation to the FATCA agreement as it does in section 1.1471-5(e)(1)(i)-(iv) of the US Treasury Regulations, and

• (b) “investment entity” has the same meaning in relation to the FATCA agreement as it does in the US Treasury Regulations.

• (6) Any expression which is defined in a relevant agreement but not in section ... 235 of FA 2013 or in these Regulations has the same meaning in these Regulations as in the relevant agreement.

• (7) In its application for the purpose of these Regulations, the CRS is to be read as if—

• (a) the optional wording in paragraph 36sexies of the commentary to Section VIII of the CRS adding the term “qualified non-profit entity” were included in the definition of “non-reporting financial institution” at sub-paragraph B(1)(f),

• (b) the optional wording in paragraph 36sexies of the commentary to Section VIII of the CRS defining the term “qualified non-profit entity” were included at sub-paragraph B(10), and references in that wording to “Jurisdiction” were a reference to the United Kingdom,

• (c) the published list referred to in Section VIII(D)(4)(ii) (definition of reportable jurisdiction) were the list contained in a notice published by the Commissioners further to this regulation, and

• (d) the published list referred to in Section VIII(D)(5)(ii) (definition of participating jurisdiction) were the list contained in a notice published by the Commissioners further to this regulation.

Meaning of “reportable account”

2

• (1) In these Regulations, a “reportable account” means—

• (a) an account which is a reportable account within the meaning of the relevant agreement,

• (b) in relation to a reporting financial institution under ... the CRS, an account that is a pre-existing entity account with an account balance or value that does not exceed US$250,000 as of 31st December 2015, ...

• (ba) in relation to a reporting financial institution under the CRS, an account meeting the description at Section III(A) of the CRS, and

• (c) in relation to a reporting financial institution under the FATCA agreement, an account meeting the description at paragraph II.A, III.A or IV.A of Annex I of the agreement.

• (2) But—

• (a) in relation to a reporting financial institution under ... the CRS, an account listed as an excluded account in Schedule 2 is not a reportable account,

• (b) in relation to a reporting financial institution under the FATCA agreement, an account is not a reportable account if—

• (i) the account holder is deceased or is a personal representative (within the meaning of section 989 of ITA 2007),

• (ii) the account is held to comply with an order or judgment made or given in legal proceedings, or

• (iii) the funds held in the account are held solely as security for the performance of a party's obligation under a contract for the disposal of an estate or interest in land or of tangible moveable property, and

• (c) in relation to a reporting financial institution—

• (i) for the purposes of ... the CRS, a dormant account (other than an annuity contract) with a balance that does not exceed US$1,000, or

• (ii) an account within paragraph (1)(b), (ba) or (c),

is not a reportable account for a calendar year if there is an election by the institution which has effect for that year to treat all such accounts, or a clearly identified group of such accounts, as not being reportable accounts.

• (3) An election under paragraph (2)(c) must be made for each calendar year for which the election is to have effect in the return required by regulation 6 for that year.

• (4) The reporting financial institution must apply the account balance aggregation and currency rules in the relevant agreement for the purposes of determining whether an account maintained by the institution is within paragraph (1)(b) or (c).

• (5) The account balance aggregation and currency rules are—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) in Section VII.C of the CRS, and

• (c) in paragraph VI.C of Annex I to the FATCA agreement.

• (6) In applying the account balance aggregation and currency rules for the purposes of a relevant agreement and these Regulations, an account balance that has a negative value is treated as having a nil value.

• (7) In determining the balance or value of an account denominated in a currency other than US dollars for the purposes of a relevant agreement and for the purposes of paragraph (1)(b) or (c), the institution must translate the relevant dollar threshold amounts into the other currency by reference to the spot rate of exchange on the date for which the institution is determining the threshold amounts.

• (8) For the purposes of a relevant agreement and these Regulations, an account held by an individual as a partner of a partnership is treated as an entity account and is not treated as an individual account.

• (9) An account is a dormant account if—

• (a) the account holder has not initiated a transaction with regard to the account or any other account held by the account holder with the reporting financial institution in the previous three years,

• (b) the account holder has not communicated with the reporting financial institution regarding the account or any other account held by the account holder with the reporting financial institution in the previous six years,

• (c) the account is treated as a dormant account under the reporting financial institution’s normal operating procedures, and

• (d) in the case of a cash value insurance contract, the reporting financial institution has not communicated with the account holder regarding the account or any other account held by the account holder with the reporting financial institution in the previous six years.

Obligations in relation to financial accounts

Due diligence requirements

3

• (1) A reporting financial institution must establish and maintain arrangements that are designed to identify in respect of a financial account—

• (a) the territory in which an account holder or a controlling person is resident for the purposes of—

• (i) income tax,

• (ii) corporation tax, or

• (iii) any tax imposed by the law of that territory that is of a similar character to either of those taxes, and

• (b) whether it is a reportable account.

• (2) A reporting financial institution must comply with paragraph (1) by applying the due diligence procedures set out in the relevant agreement.

• (2A) A reporting financial institution must keep a record of—

• (a) the steps taken to comply with this regulation, and

• (b) the information collected in the course of identifying the matters referred to in paragraph (1).

• (2B) A reporting financial institution must keep the records required by paragraph (2A) for a period of—

• (a) in respect of an account identified as a reportable account, five years beginning with the end of the year in which the account is last included in a return made under regulation 6(1), or

• (b) in respect of an account which is not a reportable account, five years beginning with the end of the last year in which the reporting financial institution relied upon the due diligence procedures to treat the account as not being a reportable account.

• (3) The due diligence procedures are—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) in relation to a reporting financial institution under the CRS, set out in Sections II to VII of the CRS and the alternative procedure provided in the optional provision in paragraph 13 of the commentary to Section VII of the CRS,

• (c) in relation to a reporting financial institution under the FATCA agreement, set out in Annex I to that agreement.

• (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (4B) Where a provision of the CRS does not specify a deadline for the requirements of that provision to be satisfied that deadline is—

• (a) in ... Section VIII(C)(10) (new account) ..., 1 January 2016,

• (b) in Section VIII B(9)(d) (exempt collective investment vehicle), 1 January 2018, ...

• (ba) in Section VIII(B)(8)(b) (qualified credit card issuer) and Section VIII(C)(17)(f)(ii) (excluded accounts), 1 January of the year following the calendar year in which the reporting financial institution implemented the policies and procedures required by those provisions, and

• (c) in all other cases, 31 December 2015.

• (5) In applying the due diligence procedures, accounts within regulation 2(1)(b), (ba) and (c) in respect of which no election under regulation 2(2)(c) has been made are treated as new accounts or pre-existing accounts as the case may be.

Modification of due diligence requirements: the DAC and the CRS

4

A reporting financial institution under ... the CRS may—

• (a) apply the due diligence procedures for new accounts to pre-existing accounts, and

• (b) apply the due diligence procedures for high value accounts to low value accounts.

Modifications of due diligence requirements: FATCA agreement

5

• (1) A reporting financial institution under the FATCA agreement may modify the due diligence requirements as follows.

• (2) In the case of an account within paragraph II.B or II.C of Annex I to the FATCA agreement, the due diligence requirements do not include the requirement to carry out the electronic search described in paragraph II.B (1) of that Annex if—

• (a) the institution has established that the account holder is a specified U.S. person from documentary evidence mentioned in paragraph VI.D of Annex I of the agreement, and

• (b) it has done so in order to meet its obligations under a Qualifying Intermediary agreement as mentioned in that paragraph.

• (3) In the case of an account with paragraph II.D or II.E of Annex I to the FATCA agreement, the due diligence requirements do not include the requirement to carry out the electronic searches described in paragraph II.B (1) or II.D (1) of that Annex or the requirement to carry out the paper record search described in paragraph II.D (2) of that Annex if—

• (a) the institution has established the account holder is a specified U.S. person from documentary evidence mentioned in paragraph VI.D of that Annex, and

• (b) it has done so in order to meet its obligations under a Qualifying Intermediary agreement as mentioned in that paragraph.

• (4) The reporting financial institution may rely on evidence that a person is a specified U.S. person obtained in relation to another financial account if the due diligence procedures in the relevant U.S. Treasury Regulations would allow such reliance.

• (5) For the purposes of this regulation references to the documentary evidence set out in paragraph VI.D of Annex I of the FATCA agreement are to be treated as if the words “other than a Form W-8 or W-9” were omitted.

Reporting obligation

6

• (1) A reporting financial institution must, in respect of the first reporting year and every following calendar year, make a return setting out the information required to be reported under the relevant agreement in relation to—

• (a) each reportable account that is maintained by the institution at any time during the calendar year in question, and

• (b) each pre-existing account identified as a reportable account by the institution at any time during the calendar year in question.

• (2) The first reporting year is—

• (a) the calendar year 2014 in relation to an account identified as a reportable account for the purposes of the FATCA agreement,

• (b) the calendar year 2016 in relation to an account identified as a reportable account for the purposes of ... the CRS.

• (3) The information required to be reported is—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) in relation to an account identified as a reportable account for the purposes of the CRS, set out in Section I of the CRS (ignoring paragraph F of Section I),

• (c) in relation to an account identified as a reportable account for the purposes of the FATCA agreement, set out in Article 2(2) of that agreement.

• (4) The return must be submitted electronically in accordance with regulation 7 on or before 31stMay of the year following the calendar year to which the return relates.

• (5) For the purposes of the information required to be reported under the relevant agreement—

• (a) interest includes any amount that is chargeable as interest under Part 4 of ITTOIA 2005 ,

• (b) references to the balance or value of an account include a nil balance or value, and

• (c) references to paying an amount include crediting an amount.

Electronic return system

7

• (1) The return must be made electronically using an electronic return system.

• (2) The form and manner of an electronic return system is specified in specific or general directions given by the Commissioners for Her Majesty's Revenue and Customs.

• (3) A return which is made otherwise than in accordance with paragraphs (1) and (2) is treated as not having been made.

• (4) An electronic return system must incorporate an electronic validation process.

• (5) Unless the contrary is proved—

• (a) the use of an electronic return system is presumed to have resulted in the making of the return only if this has been successfully recorded as such by the relevant electronic validation process,

• (b) the time of making the return is presumed to be the time recorded as such by the relevant electronic validation process, and

• (c) the person delivering the return is presumed to be the person identified as such by any relevant feature of the electronic return system.

• (6) A return made behalf of a reporting financial institution is taken to have been made by that institution, unless the institution proves that the return was made without the institution's authority.

Modifications of reporting requirements: FATCA

8

• (1) In relation to an account identified as a reportable account for the purposes of the FATCA agreement, the information required to be reported is modified as follows.

• (2) In the case of all reportable accounts for the calendar year 2014, the information required to be reported is provided in Article 3(3)(a)(1) of the FATCA agreement.

• (3) In the case of custodial accounts for the calendar year 2015, the information required to be reported is provided in Article 3(3)(a)(2) of the FATCA agreement.

• (4) In the case of pre-existing accounts—

• (a) for calendar years before 2017—

• (i) there is no requirement to include a U.S. federal taxpayer identifying number if the reporting financial institution does not hold that number, but

• (ii) if the account holder is an individual whose date of birth the institution does hold, the institution must include the account holder's date of birth instead, and

• (b) for the calendar year 2017 and subsequent years, if a reporting financial institution does not hold a U.S. federal taxpayer identifying number that it is required to report, the institution must obtain that number from the account holder.

Additional due diligence and reporting obligations in relation to payments to a non-participating financial institution: FATCA

9

• (1) In relation to a reporting financial institution under the FATCA agreement, the due diligence requirements and the information required to be reported are modified as follows in relation to payments to a non-participating financial institution.