HMRC guidance on FATCA tax rules updated
HMRC has updated the reporting requirements under the US Foreign Account Tax Compliance Act (FATCA), which may mean that some organisations or taxpayers no longer need to submit a return by the 31 May deadline
HMRC points out that two recent updates have changed the reporting criteria. Firstly, UK financial institutions are no longer required to file nil returns, following a recent clarification from the US Internal Revenue Service (IRS).
Where a UK financial institution is in a nil return position through applying the de minimis $50,000 (£32,224) or $250,000 (£171,100) threshold on pre-existing accounts, it will still be necessary to submit a return in order to make the election.
Secondly, new FATCA provisions mean that holding companies and relevant treasury companies are no longer defined as financial institutions. This is consistent with the terms of the inter-governmental agreement between the UK and the US, HMRC says.
Unless such companies came within one of the other definitions of financial institution, they would have had nil to report in any event. They will now be classified as Non-Financial Foreign Entities, and either ‘active’ or ‘passive’, dependant on the activities carried out.
HMRC says it will be issuing further specific guidance for such entities shortly, which will be subsequently incorporated into revised guidance material to be published later this year.
Anyone who needs to submit a FATCA return is reminded of the need to register and report by 31 May 2015 via a government gateway account.