HMRC has published a consultation document setting out how government intends to legislate to deliver the commitments made in the UK-US FATCA agreement to improve international tax compliance and implement the Foreign Account Tax Compliance Act (FATCA).

The UK-US agreement addresses legal barriers to financial institutions complying with FATCA; ensures that withholding tax will not be imposed on income received by UK financial institutions or on payments they make; ensures that the burdens imposed on financial institutions are proportionate to the goal of combating tax evasion, and establishes a reciprocal approach to FATCA implementation.

HMRC is seeking comments on the proposed approach as outlined in the UK-US FATCA agreement in 24 consultation questions. Comments are being sought to enable legislation to be drafted which can be operated most efficiently by affected businesses. The closing date for comments is 23 November 2012.

The proposals will be reviewed in light of the responses and draft legislation will be published by the end of the year with the view of introducing legislation in Finance Bill 2013.