Intergovernmental Agreement Signed In Relation To US Legislation

HM Revenue and Customs (HMRC) has published details of intergovernmental agreements (IGAs) to improve international tax compliance.

According to the body, the government in conjunction with European countries including France and Germany has held joint discussions with the US government to consider an intergovernmental approach to the US Foreign Account Tax Compliance Act (FATCA).

The legislation is based around combating tax evasion by US residents who are using foreign accounts and includes provisions which place a new burden on UK businesses in terms of identifying US taxpayers and registering and reporting information to the IRS without breaching UK data protection laws.

Designed to reduce some of the administration around compliance with the US regulations, the IGA outlines the process for financial institutions passing information to HMRC which will then exchange the information with the US’s Internal Revenue Services (IRS).

Full details of the changes are now available on the agreements and their implications are now online at the HMRC website.

Expert Opinion

This is an important agreement which highlights the now very global nature of modern business activity and shows how administrations in a number of countries are very keen to work together to ensure consistent and comprehensive tax compliance across jurisdictions. <br/> <br/>"It will be interesting to see what the impact of the agreements will be over the coming years and how they will help the overall battle of tackling tax evasion related to the US tax residents using foreign accounts. <br/> <br/>"Financial institutions in the UK need to be aware of their obligations regarding these changes and we would urge anyone with queries to seek advice at the first opportunity."