Following consultation, legislation will be introduced to bring into effect the UK-US agreement to improve international tax compliance and to implement FATCA (US Foreign Account Tax Compliance Act).

Since publication of the FATCA response document on 18 December, a number of elements of the overall due diligence and reporting process are still to be finalised.

HMRC accepts that business needs to have clarity in these areas as soon as possible in order to allow sufficient time to build and test systems etc, and to finalise their reporting process. The UK tax authorities will continue to discuss these issues with the US, international partners and with business and will publish further details as soon as possible.

There were also concerns about data compliance particularly on information exchange of personal data with the US tax authorities. Some respondents were concerned that an election not to apply the due diligence thresholds could cause data protection issues for financial institutions.

Respondents were clear that the regulations must enable them to meet the requirements of the Data Protection Act (DPA), and in particular the principles set out in Schedule 1 of the DPA.

The closing date for comments is 13 February 2013.

The guidance notes are for use by both business and HMRC staff who deal with entities affected by FATCA and applies to:

financial institutions;

entities that will need to certify their entity 'classification' for the purposes of FATCA; and

entities that undertake FATCA obligations on behalf of financial institutions.

Further information is available from HMRC, click HERE