FATCA is here!
In September 2012 the UK and US signed a treaty to implement the Foreign Account Tax Compliance Act (FATCA) in the UK. This legislation is aimed at reducing tax evasion by US citizens. So why should trustees of UK trusts take any notice?…because there may be a requirement for the trust to register in the UK AND the US, whether or not the trust has any US connections!!
Really? Yes – under the legislation, a trust is a foreign entity, and all entities need to consider whether they fall under the definition of a ‘financial institution’. If they do, then reporting responsibilities ensue, which could include the filing of annual returns with HMRC. The first returns are due for filing by 31 May 2015. Penalties apply for non compliance.
The rules surrounding the classification of a trust as a financial institution (FI) are complex. Broadly speaking a trust will be a FI if a trustee is a financial institution, or if the trust holds primarily investment assets that are managed on a discretionary basis by a financial institution.
Ultimately banks and other financial institutions will not be able to provide services to a trust without confirmation of a trust’s status under the regime.
In order to help trustees comply with their obligations under FATCA Burgis & Bullock can offer assistance with trust classification, registration and submission of annual returns to HMRC. For more information contact our Tax Experts on 0845 177 5500 or use our on-line contact form.