In December 2012, the Isle of Man Government announced that it would be entering into closer tax co-operation with the United Kingdom (UK) via an automatic Exchange of Information Agreement based upon the same principles as those negotiated between the UK and the United States of America (US) – this agreement is known as the Foreign Account Tax Compliance Act (FATCA).
As a result of this agreement Ramsey Crookalll are obliged to provide a broader range of information to HMRC in respect of UK resident taxpayers than that already provided under the European Savings Tax Directive (EUSD).
Details of the new agreement between the Isle of Man and the UK can be found at: www.hmrc.gov.uk/fatca/uk-crown-dependencies.pdf
Who does FATCA affect?
If you are:
- A UK tax payer, or
- A non-UK financial institution (FFI) or affiliate;
- A non-financial foreign entity (NFFE); or
- A US or UK withholding agent,
Then FATCA will affect you, It is therefore recommended that you identify how you are affected, either as an individual or an Island based corporate entity whose parent company or beneficial owner(s) are UK/US Tax Residents.
What should I do if I fall into one of these categories?
Please speak to our Ramsey Crookall dedicated FATCA team (Contact details can be found below) and, if you are subject to the requirements of either US or UK FATCA, we will be able to assist you with your FATCA obligations.
Why has FATCA been introduced?
The key objective of FATCA is to identify those UK persons who may be evading tax through the use of offshore investment vehicles, and to ensure that the UK tax authorities are collecting the appropriate amount of tax from all UK Tax Residents.
On the 19 February 2013, in support of this announcement, the Isle of Man Government entered into a ‘Memorandum of Understanding’ (MoU) with HMRC relating to co-operation in tax matters.
Under this MoU, HMRC has agreed to establish a Disclosure Facility to assist UK Taxpayers with Investments based offshore.
Details of which can be found at: www.hmrc.gov.uk/offshoreDisclosure/isleofman-memorandum.pdf
The Disclosure Facility provides an opportunity for “relevant persons” with assets or investments held in the Isle of Man to update their UK tax affairs and make a full Disclosure of outstanding liabilities.
How long will the Disclosure Facility run?
It will run between 6 April 2013 and 30 September 2016.
What Period will it cover?
It will cover the period from 6 April 1999 (date may change slightly for companies & other legal persons) to 31 December 2013.
What benefit will there be in using this Facility?
This facility is a way of identifying yourself to HMRC and informing them of any tax irregularities that would have been identified after FATCA reporting began. If you opt to use this facility, it may result in a reduced level of tax being collected by HMRC than that currently owed, as an incentive to encourage people to disclose before reporting begins.
Can I use this Disclosure Facility if I am currently under investigation by HMRC?
No. Any persons under investigation by HMRC as of 06 April 2013 cannot take advantage of this Disclosure Facility unless given express permission by the HMRC tax officer leading the inquiry.
What happens if I don’t sign up to FATCA?
If an Foreign Financial Institution (FFI) does not comply with the Disclosure obligations imposed by FATCA, a withholding tax is applied to payments made to the FFI by UK-based entities and also to payments made to it from other FFIs that are FATCA compliant.
If a UK tax resident with an account refuses consent for an FFI to pass its information to the HMRC, it will become classed as a “recalcitrant account holder” and payments made from any accounts held by it, will be subject to a 30% withholding tax.
Non-Domiciled UK Tax Residents and the Alternative Reporting Regime
If you are, or were, between the time period of 6 April 1999 to 31 December 2013, a resident but not domiciled in the UK (“A Non-Dom”) and you are taxed on a remitting basis rather than an arising basis. then Ramsey Crookall request that you contact us by using the email address provided below, clearly stating in your email that you are a non-domiciled UK Tax Resident.
When FATCA reporting beings in 2015 we will need to ensure that you are reported separately under a scheme called the “Alternative Reporting Scheme” especially designed for Non-Doms.
If you are unsure whether you fall under this category, you should seek the advice of an independent tax specialist.
What will be reported under the FATCA regime?
- NI Number
Ramsey Crookall may be contacting its clients in the future to ensure that we have up to date information for our FATCA reporting to HMRC.
What is Ramsey Crookall doing to prepare?
As a Foreign Financial Institution, Ramsey Crookall is currently focused on ensuring it is fully FATCA compliant within the relevant timescales.
We have set up a FATCA team who are fully trained and versed in both UK & US FATCA legislation who are responsible for ensuring that Ramsey Crookall meet both US & UK FATCA’s requirements.
We are also in the process of amending our processes, policies and procedures, including due diligence, and new client take-on requirements, to ensure that these are FATCA compliant. As a result of this, you may be asked to supply us with additional updated information.
For clients who fall within the scope of FATCA, and have confirmed that they require our assistance, Ramsey Crookall will:
- Register those accounts with the HMRC as appropriate; and
- Report, to either the HMRC or a Isle of Man Treasury, as required.
Who should I contact if I have a query about FATCA?
You can send an email to our dedicated FATCA email address which is monitored by our FATCA team: email@example.com
For further information, including the MoU & Frequently Asked Questions please visit the HMRC website: www.hmrc.gov.uk/offshoreDisclosure/isleofman.htm
Alternatively, you can contact HMRC’s Offshore Disclosure Facility Helpdesk on 0300 123 1080.