Obligations in relation to financial accounts
Identification obligations
6.—(1) A reporting financial institution must establish and maintain arrangements that are designed to identify reportable accounts.
(2) Such arrangements must identify the territory in which either of the following persons is resident for income tax or corporation tax purposes or for the purposes of any tax imposed by the law of that territory that is of a similar character to either of those taxes—
(a)the account holder, and
(b)any controlling person of the account holder, unless the account holder is either
(i)a financial institution, or
(ii)an active NFFE.
(3) The institution is taken to comply with the obligation to establish and maintain arrangements within paragraph (1) only if—
(a)the arrangements meet the applicable due diligence requirements as set out in this regulation (as modified by regulation 7 where an election under that regulation is in force), and
(b)the arrangements secure that the evidence used in accordance with this regulation or regulation 7, or a record of the steps taken in accordance with this regulation or regulation 7, is kept for a period of six years beginning with the end of the year in which the arrangements applied to the financial accounts.
(4) The due diligence requirements for a calendar year are set out in the following cases.
Preexisting individual accounts
Case 1
In the case of preexisting individual accounts with a balance or value that does not exceed $1,000,000 as of 30 June 2014, the procedures described at paragraphs II.B and II.C of Annex I.
But this does not apply in relation to any preexisting individual account meeting the description at paragraph II.A of Annex I in relation to which an election under regulation 4(2) is in place.
Case 2
In the case of preexisting individual accounts with a balance or value that exceeds $1,000,000 as of 30 June 2014, or 31 December 2015 or 31 December in any subsequent year, the procedures described at paragraphs II.D and II.E of Annex I.
New individual accounts
Case 3
In the case of new individual accounts, the procedures described at paragraphs III.B to III.D of Annex I.
But this does not apply in relation to any new individual account meeting the description at paragraph III.A of Annex I in relation to which an election under regulation 4(2) is in place.
Preexisting entity accounts
Case 4
In the case of preexisting entity accounts, the procedures described at paragraphs IV.D and IV.E (1) and (3) of Annex I.
But this does not apply in relation to any preexisting entity account meeting the description at paragraph IV.A of Annex I in relation to which an election under regulation 4(2) is in place.
Case 5
In the case of preexisting entity accounts with a balance or value that does not exceed $250,000 as of 30 June 2014, but with a balance or value that exceeds $1,000,000 as of 31 December 2015 or 31 December in any subsequent year, the procedures at paragraphs IV.D and IV.E (2) and (3) of Annex I.
New entity accounts
Case 6
In the case of new entity accounts, the procedures described at paragraphs V.B to V.D of Annex I.
But this does not apply in relation to any new entity account meeting the description at paragraph V.A of Annex I in relation to which an election under regulation 4(2) is in place.
(5) If in the case of an account within Case 1—
(a)an institution has established the account holder’s relevant tax status from documentary evidence mentioned in paragraph VI.D (4) of Annex I, and
(b)it has done so in order to meet its obligations under a Qualifying Intermediary agreement as mentioned in that paragraph,
the due diligence requirements in the case of that account do not include the requirement to carry out the electronic search described in paragraph II.B (1) of Annex I.
(6) If in the case of an account within Case 2—
(a)an institution has established the account holder’s relevant tax status from documentary evidence mentioned in paragraph VI.D (4) of Annex I, and
(b)it has done so in order to meet its obligations under a Qualifying Intermediary agreement as mentioned in that paragraph,
the due diligence requirements in the case of that account do not include the requirement to carry out the electronic searches described in paragraph II.B (1) or II.D (1) of Annex I or the requirement to carry out the paper record search described in paragraph II.D (2) of that Annex.
(7) If, as a result of this regulation, a person’s relevant tax status is required to be certified, a reporting financial institution may require the person to supply to the institution such documentary evidence mentioned in paragraph VI.D of Annex I as the institution considers appropriate in support of the certification.
(8) The due diligence requirements in this regulation must be applied in relation to each category of reportable account by reference to the special rules and definitions at paragraph I.D (1) to (3) and section VI of Annex I.
(9) For the purposes of this regulation references to the documentary evidence set out in paragraph VI.D of Annex I are to be treated as if the words “other than a Form W-8 or W-9” were omitted.
Modification of due diligence requirements
7.—(1) This regulation modifies the due diligence requirements set out in regulation 6 in the case of a reporting financial institution but only if it makes an election applying those modifications.
(2) If the institution obtains, or is in the process of obtaining, evidence of a person’s relevant tax status in relation to any preexisting account, it is entitled to rely on the evidence in relation to any account opened after 30 June 2014 unless it has reasonable cause to believe that the person’s relevant tax status has subsequently changed.
(3) Paragraph (2) has effect in the case of preexisting individual accounts maintained by the institution for an account holder only if, for the purpose of establishing which of the cases in regulation 6(4) are applicable to those accounts, the institution treats all those accounts as a single preexisting individual account.
(4) If the institution or a related entity obtains, or is in the process of obtaining, evidence of a person’s relevant tax status in relation to a financial account, the institution is entitled to rely on the evidence in relation to all financial accounts maintained by the institution for the account holder unless the institution has reasonable cause to believe that the person’s relevant tax status has subsequently changed.
(5) The due diligence requirements set out in regulation 6 do not need to be met in relation to a financial account if—
(a)the institution maintains the account as a result of a merger with, or acquisition of, a qualifying financial institution which had established the relevant tax status of the account holder and any controlling person, and
(b)the institution has no reasonable cause to believe that the relevant tax status of the account holder or any controlling person has changed.
(6) For this purpose “qualifying financial institution”, in relation to a financial institution, means another financial institution—
(a)which has not previously been a related entity of the institution, and
(b)which immediately before the merger or acquisition was either a reporting financial institution for the purposes of these Regulations or a financial institution described under sub-paragraph 1(p) of Article 1 of the relevant agreement.
(7) An election under this regulation—
(a)is to be made by being given to the Commissioners,
(b)must be made in the return required under regulation 8, and
(c)has effect in relation to the calendar year in respect of which the return is made and all later calendar years (unless subsequently withdrawn).
Reporting obligations
8.—(1) A reporting financial institution must, in respect of 2014 and every following calendar year, prepare a return setting out—
(a)the required information in relation to every reportable account of that category that is maintained by the institution at any time during the calendar year in question, and
(b)the institution’s Global Intermediary Identification Number (or, if it has not been allocated such a number, the Unique Taxpayer Reference number allocated to the institution by HMRC).
(2) If during the calendar year in question the reporting financial institution maintains no reportable accounts, the return must state that fact.
(3) The institution must send a return under this regulation to an officer of Revenue and Customs on or before 31st May of the year following the calendar year to which the return relates (“the reporting date”).
(4) The required information is—
(a)the name and address of the account holder,
(b)the account holder’s social security number,
(c)if an account is identifiable by an account number, that number or, if not, any functional equivalents,
(d)the balance or value of the account (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) as of the end of the calendar year or, if the account was closed during the year, the balance or value on the date that the reporting financial institution closed the account,
(e)the relevant total gross credits, or if there are none, a statement of that fact,
(f)if the account holder is an individual, that person’s date of birth, and
(g)if the account holder is a passive NFFE that has a controlling person who is a specified person, the name and address of that specified person, and, if that person is an individual, that person’s—
(i)social security number, and
(ii)date of birth.
(5) The “relevant total gross credits” means—
(a)in the case of a custodial account—
(i)the total gross amount of interest, the total gross amount of dividends and the total gross amount of other income generated with respect to assets held in the account which is paid into, or with respect to, the account during the calendar year, and
(ii)the total gross proceeds from the sale or redemption of property paid into the account during the calendar year if the institution acted as a custodian, broker, nominee or otherwise as an agent for the account holder,
(b)in the case of a depository account, the total gross amount of interest paid to the account during the calendar year, and
(c)in the case of any other account, the total gross amount of sums paid by the institution under a legal obligation to the account holder with respect to the account during the calendar year,
and “interest” here includes any amount that is chargeable as interest under Part 4 of ITTOIA 2005(1).
(6) For the purposes of this regulation—
(a)references to the balance or value of an account include a nil balance or value,
(b)references to paying an amount include crediting an amount,
(c)“social security number” means—
(i)in relation to the Isle of Man agreement, either the number allocated to a person for the social security purposes or a person’s United Kingdom National insurance number,
(ii)in relation to any other relevant agreement, the number allocated to a person for the social security purposes of Guernsey, Jersey or Gibraltar as the case may be.
(7) If a reporting financial institution has an established practice for the periodic valuation of accounts of a particular description otherwise than at the end of a calendar year, the institution may report under paragraph (5)(a) or (c) by reference to a period of 12 months ending with the date (or, if more than one, the latest date) in the calendar year on which the institution values accounts of that description (instead of by reference to the calendar year).
(8) If a reporting financial institution does not hold the information that it is required to report under paragraph (4)(b), (f) and (g), the institution must obtain that information from the account holder.
Modifications for calendar years 2014 to 2016
9.—(1) In relation to any reportable account—
(a)there is no requirement to include in the return for the calendar year 2014 information about relevant total gross credits, and
(b)there is no requirement to include in the return for the calendar year 2015 any information set out in regulation 8(5)(a)(ii).
(2) In the case of preexisting accounts there is no requirement to include in the return for calendar years before 2017 any information set out in regulation 8(4)(b), (f) and (g) if the reporting financial institution does not hold that information.
(3) In the case of the calendar year 2014 the reporting date is 31st May 2016.