• Common Reporting Standard (CRS)

    Background


     

    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) and Gibraltar, 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 where more in-depth technical information on the rules governing tax residency have been published by each national tax authority.

     

    Frequently Asked Questions

    We have put these FAQs together to help you understand the Common Reporting Standard (CRS) legislation introduced in 2016 and why Lloyds Bank needs to comply as it plays its part in the world-wide fight against tax evasion.

    It is intended to answer any questions you may have following the customers mailing which started in September 2016.

    Important Note: Lloyds Bank cannot provide help or advice to customers on Common Reporting Standard (CRS) or any other tax related matter.

    We have put these FAQs together to help you understand the Common Reporting Standard (CRS) legislation introduced in 2016 and why Lloyds Bank needs to comply as it plays its part in the world-wide fight against tax evasion.

    If your questions are not answered by the literature or FAQs sent with the letter or, if you do not understand your tax obligations, you may need to decide if you want to seek independent tax advice from a tax or financial advisor.

     

  • What is the Common Reporting Standard?

    The Common Reporting Standard (CRS) is a global standard for the automatic exchange of financial account information between governments around the world to help fight against tax evasion and protect the integrity of systems.

    It requires all Banks and Financial Institutions including Lloyds Bank who operate in CRS participating countries to gather certain customer information and report it to local tax authorities.

    How does CRS affect Lloyds Banking Group?

    Lloyds Bank together with other financial institutions across the world is required to comply with the Common Reporting Standard requirements with respect to due diligence and reporting. Lloyds Bank is required to identify and report customers that are resident in a participating jurisdiction for tax purposes and are holding a financial account in another.

    Why are you asking customers about their tax residency?

    Lloyds Bank needs to comply with CRS legislation. We are obliged under CRS to identify and report customers to HM Revenue and Customs (HMRC) or their local tax authority if we understand them to have a tax residency in a participating jurisdiction which is different to the jurisdiction where the account is held. To do this we need to collect and report certain information relating to their tax residency status.

    Are all banks doing this?

    All banks and their branches in other participating jurisdictions are legally obliged to comply with Common Reporting Standard regulatory requirements.

    Why are you asking me to complete a tax residency self-certification form?

    There may be a number of reasons why we have contacted you, depending on circumstances. We have contacted those customers where we have information that leads us to believe they are resident for tax purposes in the UK or a CRS country, as applicable.

    For individual customers with account(s) in a participating jurisdiction, this is usually based on:

    • Tax residence in another participating CRS jurisdiction.
    • Current mailing or residence address which includes a PO Box number, “in care of” or “hold mail”, in another participating CRS jurisdiction.
    • One or more telephone numbers in another participating CRS jurisdiction and no telephone number in home jurisdiction.
    • Current effective Power of Attorney or Signatory Authority granted to a person with an address in another participating CRS jurisdiction.
    • For accounts that are not depository accounts – standing instructions to transfer funds to an account maintained in another participating CRS jurisdiction.

    For entities with account(s) in a participating CRS jurisdiction, this is usually based on:

    • A place of incorporation or organisation in a reportable jurisdiction.
    • An address in a reportable jurisdiction.
    • Where the entity is a trust, an address of one or more of the trustees in a reportable jurisdiction.

    You already have this information about me, why are you asking for it again? Why do you want further evidence?

    Lloyds Bank is obliged under the Common Reporting Standard to report those customers to local tax authority if we have information on them which leads us to believe they hold a financial account and are resident for tax purposes in one of the CRS participating jurisdictions. We think that some of the information we hold on you is missing or incomplete, for this reason, we need to ask you for this so we can understand if we need to send your details to the local tax authority.

    Why are you sending my tax details to the tax authority and reporting me?

    A customer may be reported to local tax authority if we have information on them which leads us to believe they hold a financial account and are resident for tax purposes in one of the CRS participating jurisdictions.

    What information are you reporting about me?

    Under the regulations similar information that we were reporting under FATCA and CDOT must be reported under CRS. That is:

    For Individuals/Controlling Persons

    • Name, address, date of birth of financial account holders.
    • Place of birth.
    • Current country of tax residence.
    • Tax Identification Number (or equivalent where applicable).
    • Account details.
    • Reporting entity where the account with us is held e.g. Lloyds Banking Group, Halifax, Bank Of Scotland.
    • The total account balance or value of your accounts as of the end of the calendar year or other appropriate period.
    • Gross amount of interest, gross amount of dividends, and the gross amount of other income or the proceeds from the sale or redemption of investments paid or credited to the account.

    For Entities

    • Name and address.
    • Current country(ies) of tax residence.
    • Tax Identification Number (or equivalent where applicable).
    • Account details.
    • The account balance or value as of the end of the calendar year or other appropriate period.
    • Gross amount of interest, gross amount of dividends, and the gross amount of other income or the proceeds from the sale or redemption of investments paid or credited to the account.
    • For some entities the information on the controlling person (please refer to above individual section).

    What accounts does CRS apply to?

    CRS applies to certain accounts with investment features such as savings, current accounts, cash value life insurance and certain other investments. However, CRS regulations allow for certain exceptions such as lending products and loans.

    I have closed my accounts with you, do you still have to report me?

    If you have closed your account during the reporting year we may still send you a letter asking you to confirm where you were resident for tax purposes. We may still need to report you to the local tax authorities where the account is held. We will only report you for the year in which the account was closed.

    What if I don’t complete and return the self-certification form?

    If you do not complete and return the self-certification form back to us then we are required to report the information we hold about your account to the local tax authority who will share it with the relevant local tax authority.

    I disagree and do not think that I should be reported to my local tax authority. What can I do?

    We understand that you may be unhappy that we shall be reporting you as tax resident in the UK or a CRS country to HMRC (or their overseas tax authority). However, we are legally obliged to comply with CRS legislation, which has been introduced into law and the information we hold on you leads us to believe that you are resident for tax purposes in a participating CRS jurisdiction.

    If you do not believe we should be sharing your information with the local tax authority you should contact us and advise us. We will re-issue a tax residency self-certification form which you should complete and return along with a reasonable explanation or any documentary proof requested such as a passport/driving licence as proof of residency for tax purposes.

    I have received more than one letter/request for information - do I need to respond to them all?

    It may be that you will receive more than one letter. As it is a Lloyds Bank Group policy to talk to our customers under each brand they hold with us you may receive letters from different Lloyds Banking Group brands. For example: if you hold accounts with Bank of Scotland and Halifax you will receive a request to complete a tax residency self-certification form from each brand. You may also receive requests from other financial institutions if you have accounts with them. You should complete every request.

    I’ve already provided you with information for FATCA/CDOT, why do I need to provide it again for CRS?

    Following the United States of America (US) Foreign Account Tax Compliance Act (FATCA) legislation and the Crown Dependencies and Overseas Territories (CDOTs) legislation, the UK has committed to the Common Reporting Standard (CRS) and the automatic exchange of information with other participating jurisdictions throughout the world. The CRS agreements are separate to the FATCA/CDOT agreements.

    For entities:

    • Under both FATCA and CDOT we have to establish your entity’s tax residence and what type of entity it is under a specific set of classification rules. This means we may have to ask you to complete a separate self-certification form for FATCA/CDOT and CRS. We can then accurately classify your organisation which will help us understand if we need to report it under either FATCA or CRS legislation as we cannot always rely on the FATCA classification for CRS, and vice versa.

    For Individuals/Entities:

    • Under both FATCA and CDOT and now CRS we have to establish where you are tax resident so that we can work out if your account is reportable to the local tax authority. If any of the information we hold for you changes and suggests your tax residence may have also changed, for example, if you move to a different country, or if you have information on your account that conflicts with your country of tax residence, we may need to contact you again to re-confirm where you are tax resident to ensure our records are accurate and that they are up to date.

    I have not consented to being reported, does this mean you are in breach of the Data Protection Act (DPA)?

    No. We are required by law to share this data with relevant tax authorities. Under the terms of the Data Protection Notice (DPN) contained in your product terms and conditions we are not required to obtain consent in such circumstances.

    However, to meet the fairness requirements of UK and local data protection legislation, we will inform you that your details have been, or may be, transferred to the relevant tax authority and subsequently shared with other authorities as appropriate. Full details of our privacy policy can be found in your terms and conditions. These can be found in the Data Protection Notices.

    I want to complain about having to complete the self-certification form?

    If you are unhappy that we have asked you to complete the tax residency self-certification form which we have sent you asking you provide your country(ies) of tax residence & TIN to allow us to confirm where you are tax resident as we are obliged to do under the Common Reporting Standard legislation please refer to our Complaint process.

  • Glossary


     

    Below are some quick definitions of some common tax compliance jargon.

    • Reportable person or Reportable entity
      A ‘reportable person’ is any individual identified by a reporting entity (such as Lloyds Banking Group) in one country as being resident for tax purposes in another reportable country (e.g. a country with which the participating party has signed an AEoI agreement) and hold a financial account. As well as personal account holders, certain entities resident in a participating country or those which have individual controlling persons who are resident for tax purposes in participating countries may be reportable.
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    • Jurisdiction
      For tax purposes a ‘jurisdiction’ is defined as an area subject to its own distinct tax regulations such as a US state, city, county or country.
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    • Participating jurisdiction
      This is a jurisdiction which has an agreement in place to exchange information in accordance with the OECD CRS.
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    • Reportable for CRS purposes
      Each jurisdiction has its own rules for defining tax residence and jurisdictions have provided information on how to determine whether a person or an entity is tax resident in the jurisdiction. Generally, an individual or an entity is resident for tax purposes in a jurisdiction, if, under the laws of the jurisdiction, it should be paying taxes there. When we determine a customer who is holding a financial account, is resident for tax purposes in a participating jurisdiction and may be reportable for CRS, we will pass the relevant information to the local tax authority. This reporting of the customer and their information means they are ‘reportable for tax purposes’ to the local authority.
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    • Self-certification
      If a customer opens a new account, invests in a new product, or has a change in circumstances which may make them tax resident in a participating jurisdiction, we may write to them asking them to complete a self- certification form confirm their place of residence for tax purposes. We may also write to some pre-existing customers who have financial accounts with us where this information has not previously been captured. This is called ‘self-certification’.
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    • Controlling person
      Controlling persons are the Natural Persons who has ultimate control over an entity. In the case of a trust, the Controlling Person(s) are the settlor(s), the trustee(s), the protector(s) (if any), the beneficiary(ies) or class(es) of beneficiaries, or any other natural person(s) exercising ultimate effective control over the trust (including through a chain of control or ownership).
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    • Entity
      For the Common Reporting Standard (CRS) this is defined as a legal person or a legal arrangement such as a corporation, organisation, partnership, trust or foundation. An entity will therefore be any customer that holds a business account, product or service.
      Under CRS, sole traders are not treated as entities but as individuals.
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    • Financial account
      The term “financial account” means an account maintained by a Financial Institution, and includes a Depository Account, a Custodial Account, certain equity or debt interest in investment entities and certain Cash Value Insurance Contract and Annuity Contract issued or maintained by a Financial Institution. A Financial account is not an excluded account as per the CRS.