On 31 January 2014 the Crown Dependencies of Guernsey and Jersey
jointly issued draft Guidance Notes (in conjunction with the Isle
of Man) on the implementation of obligations arising under the
intergovernmental agreements ("IGAs")
signed by each island with the UK in October 2013 and with the US
in December 2013. The draft Guidance Notes, as currently published,
are substantially the same for each island, subject to certain
island-specific differences. The current draft is to be to be
regarded as a work in progress and the views of local industry in
each island are being sought.
The draft Guidance Notes state that any comments submitted by 14
March 2014 will be fully considered. The intention is to publish
revised draft Guidance Notes by 31 March 2014.
To facilitate this in Guernsey, the Director of Income Tax plans
to publish by 7 February 2014 specific questions for local industry
to take into account when reviewing the draft Guidance Notes.
ANATOMY OF DRAFT GUIDANCE
The starting point for the draughtsmen of the Guidance Notes was
the draft Guidance published by HMRC on 14 August 2013 on the
implementation in the UK of the US-UK IGA signed in September 2012.
The draft Crown Dependencies' Guidance Notes includes
adaptations and interpretational information appropriate to the
islands' finance industries. The draft Guidance Notes currently
run to 145 pages. There are 22 sections and 4 Appendices. Some
sections are yet to be completed.
The Guidance Notes are intended to provide practical assistance
to both business and staff of each island's tax office when
dealing with entities affected by the IGAs and, in time, other
bilateral automatic exchange of information agreements implementing
FATCA-based reporting. In particular, the Guidance Notes are
intended to assist entities when dealing with the following
Am I a Financial Institution?
Do I maintain Financial Accounts?
Do I need to register with the IRS and, if so, by when and
Do I need to report any information and, if so, what
information, when and how?
I maintain a Financial Account for a Non Financial Foreign
Entity. What are my obligations?
The Guidance Notes cover both the US and the UK IGAs and since
they are based on the same Model 1 template developed by the US for
FATCA-based reporting, the guidance sets out a common approach for
many of the obligations under the IGAs. Where applicable,
differences between the IGAs are noted. In addition, Appendix 4
sets out key provisions which are different in the UK IGA from the
US IGA, including a section on the Alternative Reporting Regime,
available to certain UK resident non-domiciled individuals.
The draft Guidance Notes do not include the draft regulations
which will implement the IGA obligations for the financial
institutions based in each island under domestic law.
The publication of the draft Guidance Notes at this stage, even
as a work in progress, provides a helpful steer for financial
institutions based in Guernsey and Jersey and their accountholders
on some of the key issues relating to FATCA-based reporting.
However, there remain a number of areas in which further guidance
would be helpful to have a better understanding of the likely
impact of the IGAs.
The invitation to comment on the content of the draft Guidance
Notes is an opportunity for stakeholders in the finance industries
of Guernsey and Jersey to seek clarification where required and to
contribute their insights as they prepare to meet the challenges
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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