Be prepared ahead of FATCA reporting deadline, says EY

Wednesday 11 May 2016

Local businesses have to take their reporting responsibilities seriously ahead of the Foreign Account Tax Compliance Act (FATCA) reporting deadline of 30 June this year, according to Wendy Martin, tax partner at EY.

Mrs Martin recently presented EY’s FATCA, Crown Dependencies and Overseas Territories (CDOT) and Common Reporting Standard (CRS) update seminar to an audience of almost 300 people in Jersey.

The audience was advised that their businesses should, at this point in time, be in a situation where they have identified US and UK reportable accounts and have the data ready to report.

CRS, which became live on 1 January 2016, also requires companies’ attention as an increasingly pressing matter, despite the first reports not being due until 30 June 2017.

Mrs Martin said: “CRS compliant on-boarding procedures should already be in place. If they are not, you should introduce this as soon as possible to avoid a costly process to remediate your CRS programme.”

The presentation outlined some fundamental differences between FATCA and CRS reporting models and the different procedures that are in place in different jurisdictions.

Mrs Martin said: “The Jersey guidance differs from other jurisdictions as certain FATCA positions can be taken for CRS providing that their application ‘does not frustrate’ the purposes of CRS. This is helpful in reducing the risk of having to run two very different processes although there remains the risk that Jersey’s position could change in the future.

“Reporting in Jersey is also carried out on a jurisdictional basis so, for example, if one fund has investors in 90 reportable jurisdictions then 90 separate reports need to be produced by that fund alone. This is far from ideal for some businesses and industry needs to raise this with the government if they consider it to be a problem. Most other jurisdictions allow a consolidated report.”

Recent events have highlighted the importance of getting reporting right; the presentation concluded by highlighting the importance of tax compliance and the fact that HMRC will be actively using the information gained from CDOT and CRS reporting.

“The UK Government has invested millions of pounds to unearth unpaid tax and they’re going to use this information to do just that. Businesses should consider reviewing their tax structures now if they have any doubt about their tax position to prevent problems in the future once this information is exchanged,” Mrs Martin said.