Overview of the UK intergovernmental agreement for FATCA implementation

Abstract

The intergovernmental agreement (IGA) signed by the UK and US governments on 12th September, 2012 will now govern the Foreign Account Tax Compliance Act 2010 (FATCA) implementation in the UK, rather than the original US FATCA model. Though implementation is simplified, it is still in no way a trivial matter for UK financial institutions to implement the IGA — withholding tax of 30 per cent could affect US transactions. This paper provides initial answers to the questions of who is affected and from which dates, what needs to be done and what are the next steps. While the format in which reporting will be required and the method of submitting reports to HMRC have yet to be finalised, it is vital that organisations have a data collection strategy to ensure that data required are readily available.