The International Tax Compliance (Crown Dependencies and Gibraltar) Regulations 2014

Scope

Scope: definition of “reporting financial institution”

3.—(1) In these Regulations “reporting financial institution” means a person who carries on business in the United Kingdom as—

(a) a depository institution,

(b) an investment entity,

(c) a custodial institution, or

(d) a specified insurance company.

(2) But a person is not a reporting financial institution for the purposes of these Regulations if that person is a non-reporting financial institution.

(3) For the purposes of these Regulations “depository institution” means—

(a) a person carrying on a regulated activity for the purposes of the Financial Services and Markets Act 2000(1) by virtue of article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001(2), or

(b) a person who is within paragraphs (a) to (e) or (h) to (j) of the definition of “electronic money issuer” in regulation 2(1) of the Electronic Money Regulations 2011(3).

(4) For the purposes of these Regulations a person (person A) carries on business in the United Kingdom as an investment entity if—

(a) person A undertakes any of the activities referred to in sub-paragraph 1.j(1) to (3) of Article 1 of the relevant agreement in the course of carrying on business in the United Kingdom, and the gross amount of person A’s income of that business for the applicable period wholly or mainly derives from those activities, or

(b) on behalf of person A, a financial institution (person B) undertakes any of the activities referred to in sub-paragraph 1.j(1) to (3) of Article 1 of the relevant agreement in the course of carrying on business in the United Kingdom, and the gross amount of person A’s income from the activities undertaken on behalf of person A by person B for the applicable period wholly or mainly derives from investing or dealing in financial assets.

(5) For the purposes of these Regulations—

(a) if a collective investment scheme is constituted by a person (other than a trustee), who carries on business in the United Kingdom, that person (and no-one else) is a reporting financial institution in the case of the scheme and is to be regarded as the investment entity, and

(b) if a collective investment scheme is constituted otherwise than as described in sub-paragraph (a) and the manager, operator or trustee of the scheme is a person who carries on business in the United Kingdom, the manager, operator or trustee of the scheme (and no-one else) is a reporting financial institution in the case of the scheme and is to be regarded as the investment entity.

(6) In paragraph (5) “collective investment scheme” means—

(a) an investment trust within the meaning of the Corporation Tax Acts(4),

(b) a venture capital trust within the meaning of Part 6 of ITA 2007(5), or

(c) any arrangements that are a “collective investment scheme” within the meaning of Part 17 of the Financial Services and Markets Act 2000(6).

(7) For the purposes of these Regulations a person carries on a business in the United Kingdom as a custodial institution if—

(a) more than 20% of the gross amount of the income of that business as is carried on in the United Kingdom for the applicable period derives from any of—

(i) holding financial assets for the account of another person, and

(ii) performing related financial services, or

(b) the person holds assets in the United Kingdom as a nominee for another person who is a connected person within the meaning of section 1122 of CTA 2010(7).

(8) In paragraph (7)(a)(ii) “related financial services” means financial services provided by the person that directly relate to that person holding financial assets on behalf of the other person.

(9) In paragraphs (7)(a)(i) and (8) “financial assets” means—

(a) assets capable of being the subject-matter of a transaction that is an “investment transaction” within the meaning of regulation 14F of Part 2B of the Authorised Investment Funds (Tax) Regulations 2006(8),

(b) insurance or annuity contracts,

(c) commodities, or

(d) derivative contracts within the meaning of Part 7 of CTA 2009(9).

(10) In paragraph (4) and sub-paragraph (7)(a) the “applicable period” is the shorter of—

(a) the three year period—

(i) ending with the person’s most recent accounting date if that date is no more than twelve months earlier than the next reporting date, or

(ii) in any other case, the 31st December immediately before the next reporting date, and

(b) the period—

(i) starting on the later of the first day of the period determined under sub-paragraph (a) and the date that the person commenced the business, and

(ii) ending on the earlier of the last day of the period determined under sub-paragraph (a) and the last day that the person carried on the business,

and “accounting date” here has the same meaning as is given to it by section 1119 CTA 2010.

Scope: definition of “reportable account”

4.—(1) In these Regulations a “reportable account” means—

(a) an account which is a reportable account for the relevant agreement maintained in the United Kingdom by a reporting financial institution for the purposes of its business as described in regulation 3(1), and

(b) an account that is—

(i) a preexisting individual account meeting the description at paragraph II.A of Annex I,

(ii) a new individual account meeting the description at paragraph III.A of that Annex,

(iii) a preexisting entity account meeting the description at paragraph IV.A of that Annex, or

(iv) a new entity account meeting the description at paragraph V.A of that Annex.

(2) But an account in any of paragraphs (i) to (iv) of paragraph (1)(b) is not a reportable account for a calendar year if—

(a) there is an election by the reporting financial institution in force for that year to treat such accounts as not being a reportable account, and

(b) the account meets any further description specified by the institution in its election.

(3) An election under paragraph (2)—

(a) is to be made by being given to the Commissioners,

(b) must specify the description of accounts in relation to which the election is to have effect, and

(c) must be made in the return required by regulation 8.

(4) For the purposes of these Regulations—

(a) any reference to an entity account is to a financial account which is not an account the account holder of which (or, if more than one, each account holder of which) is an individual holding the account otherwise than as a partner of a partnership, and

(b) any reference to an individual account is to a financial account held in the name of an individual (whether solely or jointly with another) but not as a partner or a partnership.

(5) For the purposes of determining—

(a) whether or not a financial account maintained by an institution meets any of the descriptions in paragraph (1)(b), and

(b) which case in regulation 6(4) applies to an account,

the institution must apply the account balance aggregation and currency translation rules at paragraph VI.C of Annex I.

But, in determining the balance or value of an account denominated in a currency other than US dollars, instead of applying the currency translation rule in sub-paragraph VI.C.4 of Annex I, the institution may translate the relevant dollar threshold amounts referred to in Annex 1 and regulation 6(4) into the other currency by reference to the spot rate of exchange on the date for which the institution is determining the threshold amounts.

Scope: non-resident reporting financial institution’s UK representative

5.—(1) If a reporting financial institution is not resident in the United Kingdom, the obligations of the institution under these Regulations are to be treated as if they were also the obligations of any UK representative of the institution.

(2) “UK representative” has the same meaning as it has in—

(a) Chapter 6 of Part 22 of CTA 2010, in relation to a reporting financial institution that is within the charge to corporation tax, and

(b) Chapter 2C of Part 14 of ITA 2007(10), in relation to any other reporting financial institution.

(3) For the purposes of this regulation—

(a) a reporting financial institution which is a partnership is resident in the United Kingdom if the control and management of the business of the partnership as a reporting financial institution takes place there, and

(b) a reporting financial institution which is not a partnership is resident in the United Kingdom if it is resident in the United Kingdom for corporation tax or income tax purposes.

(1)

2000 c. 8.

(2)

S.I. 2001/544, amended by S.I. 2002/682.

(3)

S.I. 2011/99.

(4)

The meaning of “investment trust” in the Corporation Tax Acts is provided at section 1158 of the Corporation Tax Act 2010 (c. 4). Section 1158 was substituted by section 49(2) of the Finance Act 2011 (c. 11).

(5)

2007 c. 3. The meaning of “venture capital trust” in Part 6 of that Act is provided at section 259.

(6)

The meaning of “collective investment scheme” is provided at section 235 of that Act. The power under section 235(5) to provide that arrangements do not amount to a collective investment scheme has been exercised by the Treasury by the following instruments: S.I. 2001/1062, 2001/3650, 2005/57, 2007/800, 2008/1641 and 2008/1813.

(7)

2010 c. 4.

(8)

S.I. 2006/964. Part 2B was inserted by S.I. 2009/2036.

(9)

2009 c. 4. The meaning of “derivative contract” in Part 7 of that Act is provided at section 576.

(10)

Chapter 2C was inserted by paragraphs 18 to 23 of Schedule 6 to the Taxation (International and Other Provisions) Act 2010 (c. 8).