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05 Jun 2013

HMRC Publishes Finalised Guidance On FATCA

The final version of the guidance notes by HM Revenues and Customs (HMRC) regarding the Foreign Account Tax Compliance Act (FATCA) has been published, the taxman announced.

The guidance was finalised after extensive consultations with stakeholders, including the Investment Management Association (IMA). The paper consists of 145 pages and outlines the standards for global tax exchange. One of the key changes that were made in the final guidance note was the adoption of a more automatic information gathering system.

Jorge Morley-Smith, IMA´s head of tax, explained that typically tax information exchange takes place on a request basis, whereas the FATCA makes that automatic. A number of countries, including the G8, are now considering using the FATCA for automatic exchange on a multilateral basis, he added.

During the consultation period, the IMA also tried to make the process of information disclosure simpler, as the previously proposed rules were very complicated, Morley-Smith noted. The rules are now simplified and have shifted towards information that is already available. In a press release, Morley-Smith expressed his satisfaction with the final version of the guidance calling it a set of “rules that are workable for funds and fund managers, and therefore for investors”.

To help taxpayers determine their tax status, HMRC has also launched an online calculation tool; the Tax Residence Indicator is currently a pilot, so it only provides limited access. The act has still not received Royal Consent, so formally it is not yet in effect, the tax authority explained.

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