The UK Perspective Yvonne Kunihira-Davidson Compliance Technologies International FATCA- a UK perspective • The UK: – Played a key role in developing the Intergovernmental Agreement (“IGA”) framework with the U.S.; – First country to sign an IGA with the U.S. in September 2012; – First country to publish detailed implementation guidance (the HMRC Guidance Notes); – Leveraged the US IGA model to develop “UK FATCA”; – First country to implement the IGA into local law; – First country to publish detailed consultation paper on the implementation of the OECD’s CRS. FATCA- Overview of current UK Guidance • HMRC published revised Guidance Notes on August 28, 2014 (these supersede the February 28, 2014 version). • The revisions fall into two types: – Updates to reflect amendments in the U.S. Regulations; and – Revisions reflecting HMRC’s interpretation of the spirit of the IGA. HMRC Guidance Notes- key updates • Guidance was updated in the following areas: – The definition of a financial account in the following instances: • Provision of collateral • Failed trades, market claims and similar • Where placing agents are involved (for transactions settling T+2-T+7) – Definition of regularly traded on an established securities market and anti-abuse provision – Securitizations – Trusts as FFIs vs NFFEs. What does the future hold? • HMRC being lobbied by Industry to engage with the U.S. on certain implementation issues, e.g. recent IRS FAQ on Selfcertifications; responsible officer certifications by QIs in Model 1 IGA jurisdictions; • HMRC has switched its focus to implementing the CRS – Consultation period in progress – Town hall meeting scheduled for October 9, 2014 – HMRC Guidance Notes to be re-written with CRS as the status quo, and highlight differences with US FATCA and UK FATCA • UK to sign multilateral Competent Authority Agreement to exchange information under the CRS (expected at the end of October 2014). • UK FATCA to disappear when CRS goes live. Serving Two Masters Jonathan Jackel Burt, Staples & Maner, LLP We Thought the IGAs Would Save Us • Consistent rules across jurisdictions? • Multiple Models • Models Within Models – Reciprocal? Preexisting treaty/TIEA? • Were we wrong? U.S. Tax Law Is Weird • Disregarded entities • Various types of trusts (grantor, simple, complex) • Expanded affiliated group vs. related entities Local Guidance—An Adventure • Canada says an investment entity must be a “listed financial institution” under Income Tax Act § 263(1). Most PICs and trusts would be excluded. • UK says English law CSA creates no custodial account due to title transfer to collateral holder. • Cayman says sponsoring entities must be Cayman—but only under CDOT. Not practical to distinguish FATCA, CDOT in most cases. • Not to mention self-certifications… The Latest—US MFN Guidance • IGAs include most-favored nation (“MFN”) clause so that early adopters do not lose out as new issues identified. • Treasury recently posted letter informing 17 IGA countries of terms in the revised Mexico IGA (signed in April). – You did know that Mexico signed a second IGA, right? • 12 pages of quotes from the Mexican IGA that other countries are free to apply. • Those countries can decide not to adopt those provisions. • Will Treasury post those notifications? • Does not include provisions in the latest model like the provisions dealing with accounts opened prior to entry into force. Will another letter be forthcoming? The Shifting Sands of Web Guidance • Treasury IGA page has copies of IGAs, MOUs, etc. • No notification of new content. Only eagle eyes and vigilance work. • Similarly, IRS FAQs cover many material issues and could vanish in a blink. • OTOH, allows much faster guidance cycle. • Be a packrat. • Updates to Pub. 901 or a new publication? Will there ever be truly reciprocal reporting? • “Reciprocal” IGAs require U.S. to provide info already collected from USFIs re partner country individuals, limited to U.S. source income. • Meanwhile, Partner FIs are required to report all income, plus proceeds, plus account balances, plus look-thru to U.S. controlling persons of nonfinancial entities. • Article 6(1) of Model 1 commits U.S. to pursue legislation, regulations for “equivalent levels of reciprocal automatic information exchange.” • Proposal to authorize regulations in the President’s budget, but no action so far. • How is Treasury addressing/planning to address this topic?