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Local businesses need to make sure they are prepared ahead of the 30 June reporting deadline or risk penalties for non-compliance, delegates heard at a recent EY tax transparency update seminar.
Almost 300 delegates attended the seminars across the islands, which highlighted where businesses should be ahead of the reporting deadline.
Lisa McCleane, EY’s Senior Tax Manager and tax transparency expert who was one of the speakers, discussed the recently released OECD’s FAQs and what impact they have on CRS reporting.
“The release of the OECD’s FAQs have provided clarity around some areas of concern, including confirmation that the FATCA IGA Investment Entity definition should not be used for CRS classification purposes. However, there are still many areas, particularly around some aspects relating to trusts, which have still not been fully addressed. We are hoping for further clarification and updates to the trust section of the OECD Implementation Handbook over the coming months.”
In discussing where businesses should be now, Ms McCleane noted how it is critical that staff are trained appropriately on both FATCA and CRS to “ensure they deal with reporting requirements correctly and gather the appropriate data on reportable account holders in line with local rules. It’s also important to have on-boarding processes in place to ensure the required information is collected, with validation and reasonableness check procedures carried out and documented. If these foundations are not correctly set, this can lead to significant data protection and reputational risks for your business.
If not already done, we recommend communicating with your clients the information you are reporting on their behalf, thereby minimising the risk of reporting incorrect information.”
The seminar also highlighted the following key areas of risk which businesses should ensure they mitigate:
Critical to mitigating against these risks is ensuring businesses have robust procedures in place and that staff dealing with information gathering properly understand what is required.
The audience was also advised to make sure they have a robust reporting system in place, which has been tested to ensure readiness in advance of the 30 June deadline. It is crucial that testing of portals has been carried out to ensure the solution is appropriate for each jurisdiction.
Wendy Martin, EY Partner and Head of Tax in the Channel Islands, who was also a speaker at the event highlighted the importance of seeking local advice and documenting policies and procedures.
“It’s important to remember that the Common Reporting Standard is not so common. Changes are still being released by local governments, which can very easily be missed. Therefore, it is important to seek local advice when reporting in other jurisdictions.” An example of this is the UK and Guernsey requirement to register each Trustee Documented Trust within a consolidated return, whereas no such registration is required in Jersey.
“It is also crucial that all reporting processes and internal procedures are documented in time for risk audits, which are expected to commence in the near future. Jersey tax authorities have confirmed they will be auditing compliance with due diligence deadlines soon and while the Guernsey tax authorities are yet to confirm, they are likely to follow suit in some form. It is also crucial not to forget about FATCA; this year it has been suggested that penalties may apply for incorrect or late reporting,” said Mrs Martin.
