Signing IGA’s are only one piece of the puzzle for Channel Island Financial services businesses to be fully geared up for efficient automatic tax information exchange, according to a tax expert from PwC.
Both Jersey and Guernsey’s governments signed intergovernmental agreements with the UK this week (22 October) to automatically exchange information, but Debbie Payne, Director at PwC Channel Islands, says that with automatic exchange of tax information set to spread globally, local businesses need to be ready to comply.
She believes that firms need to pay close attention to the timetable for UK disclosure facilities and the implementation of both the UK and the imminent US IGA agreements, with key dates as follows:
- Firms need to contact all relevant clients by 31 December 2013 to inform them of the existence of the disclosure facility
- All compliant procedures relating to the UK agreement for opening new accounts must be in place by 1 July 2014
- Firms will need to have completed their review procedures for high value accounts by 30 June 2015
With the implementation date of the UK agreement less than a year away, Debbie says that firms in the Channel Islands should be focusing on a number of specific areas in the coming months:
“While it is welcome news that both Jersey and Guernsey are at the cutting edge of what is certain to become the new global norm in automatic information exchange, it is clear that many firms have not yet fully realised the enormity of what this means practically. Following the signing of the UK agreement this week, the US FATCA agreement is to be signed shortly with the Channel Islands, and further details about the G5 scheme are expected as soon as autumn next year. We know that the G20 are also keen to push ahead with automatic information exchange in 2015, so businesses in the Channel Islands need to plan for this in the long term.”
As well as identifying the ‘FATCA’ status of all legal entities, including partnerships and trusts, and, for US FATCA, registering those identities with the IRS, Debbie says that firms also need to carefully plan how they communicate the changes to clients:
“Explaining these changes to clients will be vital, and HMRC have confirmed that posting a notice on a website is not sufficient to comply with the terms of the agreement with the UK. Many organisations, with the exception of those in the banking and retail funds sectors, are also writing to investors in order to help confirm their ‘FATCA’ status, while firms will also need to think about training customer relations teams who will inevitably be inundated with questions from clients.
“In addition, for the vast majority of businesses, these new regulations will require significant changes to technology systems and processes used to effect client take-on and ensure compliance. Businesses need to set up dedicated project teams to ensure that new accounts opened from 1 July 2014 are entirely FATCA compliant.
“On an on-going basis, firms will then need to provide training to staff on the new processes and procedures, develop frameworks to assess tax risk as part of client take-on procedures, ensure an audit trail is held in the event of questions being raised by tax authorities and make sure that an efficient, sustainable governance controls are in place to ensure FATCA compliance. “
Category: Finance & Business