FATCA INFORMATION

Questions and Answers

This page provides you with an overview of the Foreign Account Tax Compliance provisions (commonly known as “FATCA”) which are contained in the US HIRE Act 2010 and the potential impact on Old Mutual Global Investors (UK) Ltd, Old Mutual Investment Management Ltd, Old Mutual Fund Managers Ltd, Old Mutual Global Investors (Asia Pacific) Ltd (hereinafter collectively referred to as “OMGI”) and all its UK, Irish and Cayman domiciled funds, as Financial Institutions, and their investors.

For a complete Information Guide, please visit www.hmrc.gov.uk.

 

Q. What is the FATCA?

A. The FACTA is a piece of US legislation within the US HIRE Act 2010 that is aimed at reducing tax evasion by US citizens.

The law affects non-US Financial Institutions (also known as “Foreign Financial Institutions” or “FFIs”) in that it requires them to introduce measures to identify and report US taxpayers who have accounts, which includes any direct customer of OMGI or any investor in any of OMGI’s funds to the US tax authorities, the Internal Revenue Service (“IRS”).  A 30% withholding tax is imposed on the US source income of any Financial Institution that fails to comply with this requirement. 

 

Q. What other agreements are in place for the purpose of improving tax compliance?

A. The UK Government stated in 2013 that it would look to sign agreements with other jurisdictions as part of its commitment to combat tax evasion.

The Isle of Man, Guernsey and Jersey (the Crown Dependencies) and the Cayman Islands, the British Virgin Islands, Bermuda, Anguilla, Turks and Caicos Islands, Montserrat and Gibraltar (the British Overseas Territories) have all entered into automatic TISAs with the UK.  TISAs impose similar obligations on Financial Institutions as the obligations under FATCA.  However, whereas FATCA concentrates on US taxpayers, TISAs are focussed on Crown Dependency, Gibraltarian and UK taxpayers and policies/accounts held with institutions in the Crown Dependencies, British Overseas Territories and the UK.

 

Q. What is the impact of these agreements on Financial Institutions?

A. FATCA

It depends on where the Financial Institution is registered and whether the Government for that jurisdiction has signed Model 1 or Model 2 agreement with the IRS.

If a Model 1 agreement has been signed, Financial Institutions in that jurisdiction will report to their local tax authority. The local tax authority will then forward the information to the IRS. As at 1 July 2014, the UK, Ireland and Cayman Islands have signed a Model 1 agreement.

If a Model 2 agreement has been signed, the Financial Institution will report direct to the IRS.

TISAs

The Crown Dependencies and the British Overseas Territories have signed agreements with the UK, meaning that Financial Institutions will have to provide data on financial accounts held by residents of those territories.

For example, a UK registered Financial Institution must provide data to UK HM Revenue & Customs where it has accounts held by Man residents, and an Isle of Man Financial Institution will provide information to the Isle of Man Treasury where it has accounts owned by UK residents.

 

Complying with FATCA and TISA

Q. Will we comply?

A. Yes, all OMGI corporate entities have been registered with the IRS and have been provided with a Global Intermediary Identification Number (“GIIN”) and these can be found below.  This number demonstrates OMGI’s intent to comply with the regulations. 

Old Mutual Global Investors (UK) Ltd

Z2YIFL.00137.ME.826

Old Mutual Investment Management Ltd

Z2YIFL.00219.ME.826

Old Mutual Fund Managers Ltd

Z2YIFL.00018.ME.826

Old Mutual Global Investors (Asia Pacific) Ltd

Z2YIFL.00220.ME.344

In addition to Old Mutual Global Investors (UK) Ltd being registered as a corporate entity with the IRS, it has also been appointed to act as sponsoring entity for all OMGI funds.  In this capacity, the sponsoring entity GIIN for Old Mutual Global Investors (UK) Ltd should be used for all OMGI funds:  BZ7AE3.00000.SP.826

The register of all complying FFIs is available to view by any third party, through the IRS website.

 

Q. When will the agreements for FATCA and TISA take effect?

A. The main requirements of the FATCA and TISA come into effect on 1 July 2014.

 

Q. What obligations does the legislation impose on us as a Foreign Financial Institution?

A. New applications

From 1 July 2014, Foreign Financial Institutions must obtain a client self-certification from individuals and to determine the applicant’s tax status. The self-certification detail requirements are being included in all OMGI fund application forms from this date.

For FATCA, this means that the applicant must certify whether or not they are US resident or a US citizen (a US Specified Person) for tax purposes.

For TISAs, this means that we must obtain a client self-certification from individuals to determine if the applicant is a Crown Dependent, Gibraltar or UK resident for tax purposes.

If the applicant is an entity, which includes individual trustees and corporate trustees, companies and other legal structures or arrangements, the rules are different and complex. However, the broad intention with entity applicants that are not established or incorporated in the US, Isle of Man, Guernsey, Jersey, Gibraltar or the UK is to look to the underlying ‘controlling persons’ to determine where they are resident for tax purposes.  Entity self-certification does not come in scope until 1 January 2015 but the UK has opted out of this delay, and the obligation to obtain self-certification forms for all new entities applies from 1 July 2014.

 

A Tax Reference Number means:

US

Tax Identification Number

Isle of Man and the United Kingdom

National Insurance Number

Jersey, Guernsey and Gibraltar

Social Security Number

 

Pre-existing clients

Financial Institutions are required to carry out a retrospective review of their existing accounts/investors on 30 June 2014 in order to identify US, Crown Dependency, Gibraltarian and UK clients.

OMGI does not have to carry out the review on that day, but can spread the screening over the next two years as follows:

For Individuals

  • For accounts/investors with holdings above US$1m, the deadline for completing the screening is 1 July 2015.
  • For accounts/investors with holdings between US$50,000 and US$1m, the deadline for completing the screening is 1 July 2016.
  • There is no requirement for screening accounts below US$50,000.

For Entities

  • The review of Pre-existing Entity Accounts with an account balance or value that exceeds $250,000 at 30 June 2014 must be completed by 30 June 2016.
  • The review of Pre-existing Entity Accounts with a balance or value that does not exceed $250,000 at 30 June 2014, but exceeds $1,000,000 at 31 December 2015 or 31 December of any subsequent calendar year, must be completed by 30 June of the following year.
  • Pre-existing Entity Accounts that are identified as reportable are only reportable from the year in which they are identified as such.

 

Q. Which products are exempt from the regulations?

A. Individual Savings Accounts (“ISAs”), pensions and term assurance policies which are not unit linked, are defined as exempt products and are therefore excluded.

 

Q. Are there any other situations where a Financial Institution must assess if an individual or entity is a US, Crown Dependency, Gibraltarian or UK Specified Person?

A. Yes, a self-certification must be obtained where there is a change of circumstance on an account/policy on or after 1 July 2014. A change of circumstance is any change on a policy which could indicate a US, Crown Dependency, Gibraltar or UK indicia. For example, where a Financial Institution is notified of a change of address or a policy is assigned. The following events, which are indicative and not exhaustive, will also be regarded as a change of circumstance:

  • An assignment to one or more individuals.
  • An assignment to a trust or legal entity.
  • Adding a power of attorney or change to a power of attorney.
  • A standing instruction to pay to a US, Crown Dependency, Gibraltar or UK bank account.
  • A change of controlling persons to an entity or trust.
  • A change of phone number to a US phone number.
  • A change of beneficiary, trustee or protector of a trust.

 

Q. Must the self-certification for a change of circumstance be obtained for all policies/accounts?

A. No, it is not required where the product is an ISA or a pension.

 

Financial advisers and their clients

Q. I am a financial adviser and I do not have any clients who fall within scope for FATCA or TISA. Do I still have to provide information on my clients, in accordance with FATCA and TISA?

A. The information requested is mandatory and is requested so that we can meet the obligations to determine if the customer is, for example a US Specified Person or Crown Dependency, Gibraltarian or UK Specified Person. If the information is not supplied, the account will be treated as reportable even if the customer is not a US Specified Person or Crown Dependency, Gibraltarian or UK Specified Person.

 

Q. If I do provide the required information and my client is not a US Specified Person or Crown Dependency, Gibraltarian or UK person, will this be reported?

A. No, this information will not be reported.

 

Q. As a financial adviser, am I an FFI and do I have to comply with FATCA or TISA?

A. The regulations are complex and in some circumstances financial advisers may be regarded as an FFI. It is suggested that legal advice is sought to determine your status under the regulations.

 

Reporting

Q. If information relating to my client is reported to the IRS or local tax authority does this mean my client will be liable to tax?

A. No, neither FATCA nor TISA imposes additional taxes on individuals. They do however provide the relevant tax authorities with information which they may or may not use to assess whether individuals or companies are liable to any taxes which have not been paid.

 

Q. When must FFIs start reporting?

A. It depends on the nature and the value of the financial account.

FATCA

Accounts which are regarded as High Value Accounts must be subject to reporting from 2015. If the policy/account starts on or after 1 July 2014, up to and including 31 December 2015, reporting must be completed by 31 May 2016 if the report is in respect of FATCA. Under TISA, the same policy/account is reportable by 30 June 2016.

Where the policy/account starts in the 2016 calendar year, it must be reported by 31 May 2017.

Where policies/accounts commence in any preceding calendar year, they must be reported by 31 May in the following calendar year.

TISA

Reports must be submitted by 30 June 2016 for policies/accounts which started on or after 1 July 2014, up to and including 31 December 2015.

Where policies/accounts commence in any preceding calendar year, they must be reported by 30 June in the following calendar year.