HMRC has published regulations and guidance on the implementation of the UK US Foreign Account Tax Compliance Act (FATCA) agreement.

The US International Tax Compliance Regulations 2013 will allow businesses to comply with their due diligence and reporting obligations under the agreement reached between the UK and US governments to improve international tax compliance and implement FATCA.

The regulations allow UK businesses to collect and provide information on specified US persons, to HMRC.

FATCA was introduced by the US in 2010 to combat tax evasion by US tax residents using foreign accounts. It requires financial institutions outside the US to pass information about their US customers to the US tax authorities, the Internal Revenue Service (IRS). A 30% withholding tax is imposed on the US source income of any financial institution that fails to comply with this requirement.

Current law does not allow financial institutions to pass FATCA information either directly to the US or to HMRC on a voluntary basis, nor does it enable HMRC to require it.

Clause 219 of Finance Bill 2013 gives the Treasury the powers to introduce the regulations, which will include a targeted anti-avoidance provision and provisions relating to penalties for non-compliance, along with an appeals process.

The regulations are expected to come into force in mid-August and will have effect for financial accounts (as defined in the legislation) held at 31 December 2013.

More details are available from HMRC

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