Is it normal working practice for a bank to ask its customers to fill-in a form on the status of their tax residence?
The forms says:
"The information will pass on to relevant tax authority"
Does any one know what could be the intention of this disclosure?
Thanks in advance
Replies (14)
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Yes in my experience it's normal practice for the question to be asked. On what they do with the information I cannot comment.
Also may relate to the
Also may relate to the agreement reached with Switzerland a couple of years ago.
Metro is sending these to all their clients. Some of the questions are pretty strange too. Its to do with FATCA. I have filled a couple out this month, the first one was a challenge. There is no box to tick for Not Applicable so you have to go through all the classifications anyway
...and Barclays have started sending them to companies
As AANM says, it's to do with the US FATCA as well as the newer provisions of so-called 'UK FATCA' and the OECD's 'CRS' (Common Reporting Standard), both of which luckily largely mirror FATCA in their definitions. It ultimately comes down to whether a body is a Financial Institution or not (as defined) - which isn't always as obvious as it might sound - and if it is not, whether it's activities qualify it as 'Active' (essentially majority trading) or 'Passive' (majority investing).
FATCA
Definitely FATCA.
If the Financial Institution wants to deal with the USA, they have to comply with the FATCA regulations, at your cost.
..not just if the USA is actually involved
The problem is that it isn't just for cases actually involving USA investment or connections. The original FATCA (the US version under the US-UK agreement) effectively has to be recognised and reported under as a precaution against any possible direct or indirect future involvement by an entity with the USA, or any UK institution (eg bank, broker) that itself does. It has a cascade effect and UK trusts and probably eventually most companies will have to consider their status and report at some point as a Foreign FI (FFI) or a Non-Financial Foreign Entity (NFFE). An FFI has to have a reference number (a GIIN) and an NFFE has to consider if it is 'Active' or 'Passive' (as earlier mentioned).........and that's just FATCA itself. The detailed rules are horribly complicated. See the guidance at: https://www.gov.uk/the-foreign-account-tax-compliance-act-reporting-information-to-hm-revenue-and-customs-fatca
What a time waster
Filled a few of these in for new companies opening bank accounts but just had to complete one for a Bowls & Social club with a turnover less than £1k, incorporated in the 1940s and with the same bank account for over 20 years!! Obviously posing a great threat to the USA.
Need a reciprocal Act
The UK Government should show their appreciation to the Americans, by passing reciprocal legislation which would require every financial institution in the USA to fill out a form for every one of their customers, to demonstrate whether that customer has UK connections. They could call it FATWA.
HSBC & TSB are asking too
Both banks have sent requests out to clients who are resident outside the UK and asked for their country of residence TINs - it's all part of the Exchange of Information procedures.
USELESS
I understand this is part of the United States Excessive Legislative Economic State Security.