Tax regulators around the world are adopting a new standard with the Automatic Exchange of financial Information (AEoI) between tax authorities in certain countries. This legislation is known as the Common Reporting Standard (CRS) and is seen as a critical tool in the world wide fight against tax evasion. To date, more than 100 countries, including the UK, Islands (Jersey, Guernsey, Isle of Man) have committed to adopting the Common Reporting Standard.
To comply with the CRS, participating jurisdictions must obtain certain customer information from their Financial Institutions and exchange that information on an annual basis with other Participating Jurisdictions.
In the UK, our first CRS report to HM Revenue and Customs (HMRC) in respect of customers we have identified as ‘Reportable Persons’ is required by 31 May 2017.
How does the Common Reporting Standard impact me?
Under the CRS, Lloyds Bank is required to identify customers who are tax resident in one country but with financial accounts held in another for inter-jurisdiction reporting purposes. To do this we need to collect and report certain information on the ‘reportable person’ and their financial account(s) to the local tax authorities.
Most customers will not need to do anything. The majority of our customers will be identified as UK resident for tax purposes in the UK and therefore not ‘reportable’. However, there will be some customers who based on the information we hold, we believe to be ‘reportable persons’ or ‘reportable entities’.
If we feel we need further information we will write to you asking you to complete a ‘Tax Residency self-certification form’. In some cases we will ask you for a reasonable explanation or additional documentary evidence as proof of tax residency. We may also write to you asking you to contact us so we can update the information we hold on you such as your Tax Payer Identification Number (TIN) or date of birth.
Do I need to do anything?
If you are affected by the CRS we may write to you asking you to either call us or to fill in a Tax Residency self-certification form. We will let you know what we need you to do.
What does the Common Reporting Standard mean for customers?
Lloyds Bank is obliged to report to the local tax authority, the customers with a financial account who are tax resident in another participating jurisdiction. The local tax authority will then pass this information onto the participating jurisdiction where it has been established that the customers are resident for tax purposes.
Where can I find out more about the CRS?
There has been significant coverage on CRS and there are many information resources available, including on HM Revenue and Customs (HMRC) or local tax authorities’ websites. In the first instance, you may like to look at the OECD website (PDF) where more in-depth technical information on the rules governing tax residency have been published by each national tax authority.