Welcome to this week's Responsible Officers’ operational tax updates, providing you with a succinct weekly analysis of select legislative changes, regulations and reporting news from the mix of operational taxes, tax transparency and information exchange regimes.
The deadline is fast approaching for Financial Institutions to identify and send the HMRC notification letter to clients who need it by 31 August 2017- there could be a one-off penalty of £3,000 for failure to do so. If you’re classed as a ‘Specified Financial Institution’ or ‘Specified Relevant Person’ you may need to send the notification letter to clients who are UK tax resident if you’ve:
- provided them with financial advice or services
- provided them with an overseas account
- referred them for an overseas account
- referred them for advice or services overseas
All Cayman financial institutions were required to register, or vary their existing US FATCA/UK CDOT registration, for CRS on the AEOI Portal, even if they have no reporting obligations by 31 July 2017 or potentially be subject to a fine of up to KYD 50,000. The Department for International Tax Cooperation has stated that late registrations and variations will continue to be accepted but action should be taken urgently.
Late on Friday afternoon the IRS published Notice 2017-42, which provided additional transitional relief in respect of the 871(m) regulations. A few initial observations:
- An additional year has been provided in respect of the phase in period under Notice 2016-76.
- No withholding on actual and dividend equivalents paid to a QDD when acting in this capacity with net delta calculations beginning in 2019.
- The Notice mentions that the 871(m) regulations are being evaluated as a part of President Trump's review of outdated, ineffective, or excessively burdensome regulations.
- There are no comments on the QSL regime in the notice
Finance Bill (No.2) 2017 confirmed that certain UK resident, non UK domiciled individuals (RNDs) will be treated as UK domiciles for all tax purposes from 6 April 2017. This will mean RNDs who have been resident in the UK for 15 out of the past 20 tax years will be subject to income and capital gains tax on a worldwide basis. Whilst this changes the way RNDs are taxed considerably, there are a couple of provisions which provide some respite. RNDs will be able to 'rebase' offshore assets at their value on 5 April 2017 and be able to segregate untaxed unremitted mixed funds.
Read on for a selection of latest news and further details about the points above.