HMRC Updates Financial Institutions on Progress Made Towards Implementing Common Reporting Standard in the UK

With one month to go before the Common Reporting Standard (CRS) comes into force in the UK, delegates attending the 3rd Sovos AEOI Networking Event welcomed the opportunity to question a speaker from the HMRC on the progress being made and hear what the financial regulator might be expecting from financial institutions.

Entitled ‘Fail to Prepare, Prepare to Fail’, the event took place in London on November 30. Delegates from a wide range of financial institutions and professional services firms heard from two key-note speakers from the HMRC and a panel of speakers representing a cross section of views from the financial services industry. (To read more about the event, click here).

This event followed the highly successful AEOI networking event that Sovos held in New York in September. (To read more about this event, click here). Sovos invests in these events so as to help its customers and the financial services industry better prepare for the advent of the Automatic Exchange of Information (AEOI), an OECD-inspired global initiative designed to tackle tax evasion that will have profound implications for the financial services industry.

About the speaker

Elinor Crockford is a Policy Advisor working in HMRC’s Exchange of Information Policy team. She joined the team in 2015 and is now the communications lead. She joined HMRC in 2004 and had previously worked across several compliance roles.

A Chance to Hear from the Industry Regulator

Delegates attending the event welcomed the opportunity not just to hear Elinor’s presentation but to ask her detailed questions too. In a survey carried out after the event, respondents rated ‘hear at first hand from the industry regulator’ as one of the biggest benefits they received from attending. Other important benefits they listed included ‘opportunity for industry networking’ and ‘learn more about an industry topic that may impact my employer.’
Below is a brief summary of what the delegates heard from Elinor.

The Clock is Ticking

Elinor confirmed that the first early adopter jurisdictions will start reporting in 2017, just a few weeks away. She emphasised that CRS is a much bigger prospect than FATCA and therefore requires a greater level of preparedness. Some financial institutions are experiencing teething problems that are requiring extra support from HMRC.

Included in her progress report were the following updates:

• The 2017 Reportable Jurisdictions list has been published on the HMRC website.
• HMRC has received 2016 FATCA data and is reviewing it. (Most of the data is good quality.)
• The schema team at HMRC are working on one new schema for CRS reporting. This will cover all three regimes including
• FATCA, CDOT and CRS. A guidance note will be published soon.
• The OECD is due to publish a new set of FAQs which it will post to its website.

First Came Implementation now Comes Compliance

Elinor stated that the HMRC has spent the last two years on implementation and was now putting much greater emphasis on compliance. Her main points were as follows:

• Providing ‘high quality data’ will be very important to HMRC. (The key to providing good data is having robust systems that can collect it.)
• HMRC will adopt a ‘light-touch’ approach to start and will be concentrating its efforts on helping those financial institutions that are struggling most.
• Those financial institutions which have undergone mergers or made multiple acquisitions may now have systems that are appropriate for serving their clients but these may not be appropriate for delivering the level of information required by these new regulations.
• HMRC is investing heavily in training its own staff and expects financial institutions to do the same.

Criminal Finances Bill

The other keynote speaker at the event was also from the HMRC. Jennifer Haslett works in the Corporate Crime and International Engagement division of the Centre for Offshore Evasion Strategy. Jennifer is leading the HMRC’s efforts to introduce an important new piece of legislation that will have far-reaching implications for the financial services industry, not just in the UK but across the globe.

The Criminal Finances Bill will be enacted into law in 2017. It will introduce a new corporate offence that will apply to organisations whose representatives criminally facilitate tax evasion. The main impact of these new offences will be compliance-related and businesses will need to ensure that their procedures are sufficiently robust so as to provide a defence.

Sovos is aware that this is another key issue for our customers. We’ll be publishing a blog about it very soon and will be arranging an event to discuss this topic in 2017.