The Common Reporting Standard (CRS)
was approved by the OECD Council in 2014 as a global standard to facilitate the
automatic exchange of financial information between OECD tax jurisdictions on
an annual basis.
It is similar to the US Foreign
Account Tax Compliance Act (FATCA) which has been in operation since 2010 and
requires foreign financial Institutions to report to the US tax authorities
details of financial accounts held by US tax payers. FACTA has specific exemptions for Charities
but unfortunately so far the CRS in the UK does not give exemption.
Some Charity clients may well be aware
that UK Banks want disclosure in relation the FATCA despite this specific
Returning to the subject of the CRS,
any Charity which derives most of its income from an investment portfolio such
as a grant making Trust, is likely to be caught by the definition of a
financial Institution and have to identify the tax status of all grantees
whether Institutions or individuals which will create a highly hugely expensive
administration burden and not all the information evidence required will even
These Charities will need to report
due diligence on all their grantees whether they are individuals or Institutions
and say whether they are resident in the UK or overseas.
The items to be reported are:
name, addres, jurisdictions of residence, TIN (Tax Identification Number) and
date and place of birth of each reportable person that is an account holder of
the account, i.e. any individual receiving a grant or the benefit of a grant.
2. Where entity is an account holder and that
after of application the due diligence procedures, is
identified as having one or more controlling persons that is a reportable
name, address, jurisdiction of residence and TIN of the entity and the name
address, jurisdictions of residence, TIN and date and place of birth of each
came into force on 1st January 2016 in the UK and the first
reporting will be required from 31 May 2017.
HMRC has now issued specific guidance for Charities.