NRI's CORNER
F.E.M.A.
 
AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND TO IMPROVE INTERNATIONAL TAX COMPLIANCE AND TO IMPLEMENT FATCA
 
Whereas, the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland (each, a “Party”) have a longstanding and close relationship with respect to mutual assistance in tax matters and desire to  conclude an agreement to improve international tax compliance by further building on that relationship,
 
Whereas, Article 27 of the Convention between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains (“the Convention”) authorises exchange of  information for tax purposes, including on an automatic basis,
 
Whereas, the United States of America enacted provisions commonly known as the Foreign  Account Tax Compliance Act (“FATCA”), which  introduce  a reporting regime for financial institutions with respect to certain accounts,
 
Whereas, the Government of the United Kingdom of Great Britain and Northern Ireland  is  supportive  of  the  underlying  policy  goal  of  FATCA to  improve  tax compliance,
 
Whereas, FATCA has raised a number of issues, including that United Kingdom financial institutions may not be able to comply with certain aspects of FATCA due to domestic legal impediments,
 
Whereas,  the Government of the United States of America collects  information regarding certain accounts maintained by U.S. financial institutions held by United Kingdom residents  and  is  committed  to  exchanging  such  information  with  the Government of the United Kingdom of Great Britain  and Northern  Ireland  and pursuing equivalent levels of exchange,
 
Whereas,  the  Parties  are  committed  to  working  together  over  the  longer  term towards  achieving  common reporting  and  due  diligence  standards  for  financial institutions,
 
Whereas, the Government of the United States of America acknowledges the need to coordinate the reporting obligations under FATCA with other U.S. tax reporting obligations of United Kingdom financial institutions to avoid duplicative reporting,
 
Whereas, an intergovernmental approach to FATCA implementation would address legal impediments and reduce burdens for United Kingdom financial institutions,
 
Whereas, the Parties desire to conclude an agreement to improve international tax compliance  and  provide  for  the  implementation  of  FATCA based  on  domestic reporting  and  reciprocal  automatic  exchange  pursuant  to  the  Convention  and subject to the confidentiality and other protections provided for therein, including the provisions limiting the use of the information exchanged under the Convention.
 
Now, therefore, the Parties have agreed as follows:
 
 
 
ARTICLE 1
 
Definitions
 
1.      For purposes of this agreement and any annexes thereto (“Agreement”), the following terms shall have the meanings set forth below:
 
a)       The  term  “United  States”  means  the  United  States  of  America, including the States  thereof,  but do not include the U.S. Territories. Any reference to a “State” of the United States includes the District of Columbia.
 
b)      The     term     “U.S.     Territory”    means    American     Samoa,     the Commonwealth  of          the      Northern    Mariana   Islands,   Guam, the Commonwealth of Puerto Rico, or the U.S. Virgin Islands.
 
c)       The term “IRS” means the U.S. Internal Revenue Service.
 
d)      The  term  “United  Kingdom”  means  Great  Britain  and  Northern Ireland,  including  any  area  outside  the  territorial  sea  of  the  United Kingdom which in accordance with international law has been or may hereafter  be   designated,  under  the  laws  of  the  United  Kingdom concerning the Continental Shelf, as an area within which the rights of the United Kingdom with respect to the sea bed and sub-soil and their natural resources may be exercised.
 
e)       The term “Partner Jurisdiction” means a jurisdiction that has in effect an agreement with the United States to facilitate the implementation of FATCA.   The   IRS   shall   publish   a   list   identifying   all   Partner Jurisdictions.
 
f)       The term “Competent Authority” means:
 
(1)     in the case of the United States, the Secretary of the Treasury or his delegate; and
 
(2)     in the case of the United Kingdom, the Commissioners for Her Majesty’s Revenue and Customs (“HMRC”) or their authorised representative.
 
g)    The  term  “Financial  Institution”  means  a  Custodial  Institution,  a Depository Institution, an Investment Entity, or a Specified Insurance Company.

h)     The term “Custodial Institution” means any entity that holds, as a substantial portion of its business, financial assets for the account of others.   An entity holds financial assets for the account of others as a substantial   portion   of   its   business   if   the   entity’s   gross   income attributable  to  the  holding  of  financial assets  and  related  financial services  equals  or  exceeds  20  percent  of  the  entity’s  gross  income during the shorter of: (i) the three-year period that ends on  December 31 (or the final day of a non-calendar year accounting period) prior to the  year  in which the determination is being made; or (ii) the period during which the entity has been in existence.
 
i)       The  term  “Depository  Institution”  means  any  entity  that  accepts deposits in the ordinary course of a banking or similar business. (Bank included in Depository)
 
j)       The term “Investment Entity”  means any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the  following  activities  or operations  for or on behalf of a customer:
 
(1)   trading in money market instruments (cheques, bills, certificates of deposit, derivatives, etc.); foreign exchange; exchange, interest rate and index instruments; transferable securities; or commodity futures trading;
 
(2)     individual and collective portfolio management; or
 
(3)     otherwise investing, administering, or managing funds or money on behalf of other persons.
 
This subparagraph 1(j) shall be interpreted in a manner consistent with similar language set forth in the definition of “financial institution” in the Financial Action Task Force Recommendations.
 
k)     The term “Specified Insurance Company” means any entity that is an insurance company (or the holding company of an insurance company) that  issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract.
 
l)       The  term  “United  Kingdom  Financial  Institution”  means  (i)  any Financial Institution resident in the United
      Kingdom, but excluding any branches  of  such  Financial  Institution  that  are  located  outside  the United
       Kingdom,  and  (ii)  any  branch  of  a  Financial  Institution  not resident in the United Kingdom, if such branch is
      located in the United Kingdom.
 
m)     The term “Partner Jurisdiction Financial Institution” means (i) any Financial Institution resident  in a Partner Jurisdiction,  but excluding any  branches of such Financial Institution that are located outside the Partner  Jurisdiction, and (ii) any branch of a Financial Institution not resident in the  Partner Jurisdiction,  if such branch is located  in  the Partner Jurisdiction.
 
n)      The  term  “Reporting   Financial  Institution”  means  a  Reporting United  Kingdom Financial  Institution  or a Reporting  U.S.  Financial Institution, as the context requires.
 
o)      The term “Reporting United Kingdom Financial Institution” means any United Kingdom Financial Institution that is not a Non-Reporting United Kingdom Financial Institution.
 
p)      The  term  “Reporting  U.S.  Financial  Institution”  means  (i)  any Financial Institution that is resident in the United States, but excluding any  branches of such Financial Institution that are located outside the United States, and (ii) any branch of a Financial Institution not resident in the United  States, if such branch  is located in the United States, provided that the Financial Institution or branch has control, receipt, or custody of income with respect to which information is required to be exchanged under subparagraph (2)(b) of Article 2 of this Agreement.
 
q)      The term “Non-Reporting  United Kingdom Financial Institution” means   any  United  Kingdom  Financial Institution,  or  other  entity resident in the United Kingdom that is identified in Annex II as a Non- Reporting United   Kingdom  Financial  Institution  or  that  otherwise qualifies as a deemed-compliant FFI, an exempt beneficial owner, or an excepted FFI under relevant U.S. Treasury Regulations.
 
r)       The    term    “Nonparticipating    Financial     Institution”    means    a nonparticipating FFI, as that term is defined in relevant U.S. Treasury Regulations,   but   does   not   include  a  United   Kingdom   Financial Institution or other Partner Jurisdiction Financial Institution other than a   Financial   Institution   identified   as  a Nonparticipating   Financial Institution pursuant to paragraph 2 of Article 5.
 
s)       The  term “Financial Account”  means  an  account  maintained  by  a Financial Institution, and includes:
 
(1)     in  the  case  of  an  entity  that  is  a  Financial  Institution  solely because  it is an Investment  Entity, any
           equity  or debt  interest (other  than interests that are regularly traded on an established securities market)
       in the Financial Institution;
 
(2)    in   the   case   of   a   Financial   Institution   not   described   in subparagraph 1(s)(1)  above,  any  equity  or  debt  interest  in  the Financial Institution (other than interests that are regularly traded on an established securities market), if (i) the value of the debt or equity  interest is determined, directly or indirectly, primarily by reference to  assets  that  give rise to  U.S. Source Withholdable Payments, and (ii)  the class of interests was established with a purpose of avoiding reporting in accordance with this Agreement; and
 
(3)     any  Cash  Value  Insurance  Contract  and  any Annuity  Contract issued  or  maintained  by  a  Financial  Institution,  other  than  a noninvestment-linked,  nontransferable  immediate  life  annuity that  is   issued  to  an  individual  and  monetizes  a  pension  or disability   benefit   provided   under   an   account,   product,   or arrangement   identified   as   excluded   from   the   definition   of Financial Account in Annex II.
 
Notwithstanding the foregoing, the term “Financial Account” does not include  any account,  product, or arrangement  identified as excluded from the definition of Financial Account in Annex II.
 
t)       The term “Depository Account” includes any commercial, checking, savings,  time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the ordinary  course of a banking or similar business.  A Depository Account  also  generally  includes  an  amount  held  by  an insurance  company  under  an   agreement  to  pay  or  credit  interest thereon.
 
u)      The  term  “Custodial  Account”  means  an  account  (other  than  an Insurance  Contract  or Annuity  Contract)  for  the  benefit  of  another person   that  holds   any  financial  instrument   or  contract   held  for investment   (including,  but  not  limited  to,  a  share  or  stock  in  a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency  or commodity  transaction,  a credit default  swap, a swap based  upon  a  nonfinancial  index,  a  notional  principal  contract,  an Insurance  Contract  or  Annuity  Contract,  and  any  option  or  other derivative instrument).
 
v)      The term “Equity Interest” means, in the case of a partnership that is a Financial   Institution,   either   a   capital 
      or   profits   interest   in   the partnership.   In the case of a trust that is a Financial Institution, an Equity  Interest  is
    considered  to be held by  any  person treated  as  a settlor or beneficiary of all or a portion of the trust, or any other
      natural person exercising ultimate effective control over the trust.  A Specified U.S. Person shall be treated as being
      a beneficiary of a foreign trust if such Specified U.S. Person has the right to receive directly or indirectly (for
      example,  through  a  nominee)  a  mandatory  distribution  or  may receive, directly or indirectly, a discretionary
      distribution from the trust.
 
w)     The  term  “Insurance  Contract”  means  a  contract  (other  than  an Annuity Contract) under which the issuer agrees to pay an amount upon the   occurrence   of   a   specified   contingency   involving   mortality, morbidity, accident, liability, or property risk.
 
x)      The term “Annuity Contract” means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals.  The term  also  includes  a  contract  that  is  considered  to  be  an  Annuity Contract  in  accordance  with  the  law,  regulation,  or  practice  of  the jurisdiction  in  which  the  contract  was  issued,  and  under  which  the issuer agrees to make payments for a term of years.
 
y)      The  term  “Cash  Value  Insurance  Contract”  means  an  Insurance Contract  (other  than an indemnity reinsurance contract between two insurance companies) that has a Cash Value greater than $50,000.
 
z)       The term “Cash Value” means the greater of (i) the amount that the policyholder is entitled to receive upon surrender or termination of the contract  (determined  without  reduction  for  any  surrender  charge  or policy loan), and (ii) the amount the policyholder can borrow under or with regard to the  contract.   Notwithstanding the foregoing, the term “Cash Value” does not include an amount payable under an Insurance Contract as:
 
(1)     a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against;
 
(2)     a refund to the policyholder of a previously paid premium under an Insurance Contract (other than under a life insurance contract) due  to   policy   cancellation  or  termination,  decrease  in  risk exposure during the effective period of the Insurance Contract, or arising from a redetermination of the premium due to correction of posting or other similar error; or
 
(3)     a policyholder dividend based upon the underwriting experience of the contract or group involved.
 
aa)   The   term   “Preexisting   Account”   means   a   Financial Account maintained by a Reporting Financial Institution as of December 31, 2013.
 
bb)    The term “Reportable Account” means a U.S. Reportable Account or a United Kingdom Reportable Account, as the context requires.
 
cc)     The term “United Kingdom Reportable Account” means a   Financial  Account   maintained  by   a  Reporting   U.S. Financial  Institution  if:  (i)  in  the  case  of  a  Depository Account, the account is held by an individual resident in the United Kingdom  and more than $10 of interest is paid to such account in any given calendar year; or (ii) in the case of a Financial Account other than a Depository Account, the Account  Holder  is  a  resident  of  the  United  Kingdom, including entities that certify  that they are resident in the United Kingdom for tax purposes,  with respect to which U.S.  source  income  that  is  subject  to   reporting  under chapter 3 or chapter 61 of subtitle A of the  U.S.  Internal Revenue Code is paid or credited.
 
dd)    The term “U.S. Reportable Account” means a Financial Account   maintained   by   a  Reporting   United   Kingdom Financial  Institution  and  held  by  one  or  more  Specified U.S.  Persons  or by a Non-U.S. Entity  with one or more Controlling   Persons   that  is   a   Specified   U.S.   Person. Notwithstanding  the  foregoing,  an  account  shall  not  be treated as a U.S. Reportable Account if such account is not identified as a U.S. Reportable Account after application of the due diligence procedures in Annex I.
 
ee)    The  term “Account Holder”  means the person  listed  or identified  as  the  holder  of  a  Financial  Account  by  the Financial Institution that maintains the account.  In the case of a Cash Value Insurance Contract or an Annuity Contract, the  Account  Holder  is  any  person  entitled  to  access  the Cash Value or change the beneficiary of the contract.  If no person can access the Cash Value or change the beneficiary, the Account Holders are any person named as the owner in the contract and  any person with a vested entitlement to payment under the terms of the contract.  Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment under the contract is treated as an Account Holder.

ff)     The term “U.S. Person” means a U.S. citizen or resident individual,  a  partnership  or  corporation  organized  in  the United States or under the laws of the United States or any State thereof, a trust if (i) a court within the United States would have authority under applicable law to render orders or judgments  concerning substantially all issues regarding administration  of  the   trust,  and  (ii)  one  or  more  U.S. persons   have   the   authority   to   control   all   substantial decisions of the trust, or  an estate of a decedent that is a citizen or resident of the United States.  This subparagraph
1(ff)  shall  be  interpreted  in  accordance  with  the  U.S. Internal Revenue Code.
 
gg)     The term “Specified U.S. Person” means a U.S. Person, other than:  (i) a corporation the stock of which is regularly traded on  one or more established securities markets; (ii) any corporation  that is  a member  of the same expanded affiliated group, as defined in section 1471(e)(2) of the U.S. Internal Revenue Code, as a corporation described in clause (i); (iii) the United States or  any wholly owned agency or instrumentality thereof; (iv) any State of the United States, any U.S. Territory, any political  subdivision of any of the foregoing, or any wholly owned agency  or instrumentality of any one or more of the foregoing;  (v) any organization exempt from taxation under section 501(a) or an individual retirement  plan  as  defined  in  section  7701(a)(37)  of  the U.S. Internal Revenue Code; (vi) any bank  as defined in section 581 of the U.S. Internal Revenue Code;  (vii) any real estate investment trust as defined in section 856 of the U.S. Internal Revenue Code; (viii) any regulated investment company  as  defined  in  section  851  of  the  U.S.  Internal Revenue Code or any entity registered with the Securities Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-64); (ix) any common trust fund as defined  in  section  584(a)  of  the  U.S.  Internal  Revenue Code; (x) any  trust that is exempt from tax under section 664(c)  of  the  U.S.  Internal  Revenue  Code  or  that  is described   in   section   4947(a)(1)   of   the   U.S.   Internal Revenue Code; (xi) a dealer in securities, commodities, or derivative   financial   instruments (including   notional principal contracts, futures, forwards,  and options) that is registered as such under the laws of the United States or any State; or (xii) a broker as defined in section 6045(c) of the U.S. Internal Revenue Code.
 
hh)    The  term  “Entity”   means  a  legal  person  or  a  legal arrangement such as a trust.

ii)      The term “Non-U.S. Entity” means an Entity that is not a U.S. Person.
 
jj)     The term “U.S. Source Withholdable Payment” means any payment of interest (including any original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations,   remunerations,   emoluments,   and   other fixed  or determinable annual  or periodical  gains, profits, and income,  if such  payment is from sources within  the United   States.   Notwithstanding   the   foregoing,   a   U.S. Source   Withholdable   Payment   does   not   include   any payment that is not treated  as  a withholdable  payment in relevant U.S. Treasury Regulations.
 
kk)    An Entity is a “Related Entity” of another Entity if either Entity  controls  the  other  Entity,  or  the  two  Entities  are under  common control.   For this purpose control includes direct or indirect ownership of more than 50 percent of the vote or value in an Entity.  Notwithstanding the foregoing, the  United  Kingdom  Competent  Authority  may  treat  an Entity as not a  Related Entity of another Entity if the two Entities are not  members of the same expanded affiliated group as defined in section 1471(e)(2) of the U.S. Internal Revenue Code.
 
ll)      The  term  “U.S.  TIN”  means  a  U.S.  federal  taxpayer identifying number.
 
mm)  The term “Controlling Persons” means the natural persons who exercise control over an entity.  In the case of a trust, such term  means the settlor, the trustees, the protector (if any), the  beneficiaries  or  class  of  beneficiaries,  and  any other natural  person  exercising  ultimate  effective  control over the trust, and in the case of a legal arrangement other than  a  trust,  such  term  means  persons  in  equivalent  or similar positions.  The term “Controlling Persons” shall be interpreted      in      a     manner      consistent      with      the Recommendations of the Financial Action Task Force.
 
2.      Any term not otherwise defined in this Agreement shall, unless the context otherwise requires or the Competent Authorities agree to a common meaning (as permitted by domestic law), have the meaning that it has at that time under the law of the Party applying the Agreement, any meaning under the applicable tax laws of that Party prevailing  over a meaning given to the term under other laws of that Party.

 
ARTICLE 2
 
Obligations to Obtain and Exchange Information with Respect to Reportable Accounts
 
1.      Subject to the provisions of Article 3, each Party shall obtain the information specified in paragraph 2 of this Article with respect to all Reportable Accounts and shall annually exchange this information with the other Party on an automatic basis pursuant to the provisions of Article 27 of the Convention.
 
2.      The information to be obtained and exchanged is:
 
a)      In the case of the United Kingdom with respect to each U.S. Reportable Account of each Reporting United
        Kingdom Financial Institution:

 
(1)     the name, address, and U.S. TIN of each Specified U.S. Person that is  an Account Holder of such account and, in the case of a Non-U.S.   Entity  that,  after  application  of  the  due  diligence procedures set  forth in Annex I, is identified as having one or more Controlling  Persons  that  is  a Specified  U.S.  Person,  the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;
 
(2)     the account number (or functional equivalent in the absence of an account number);
 
(3)     the  name  and  identifying  number  of  the  Reporting  United
Kingdom Financial Institution;
 
(4)     the account balance or value (including,  in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender  value) as of the end of the relevant calendar year or other appropriate  reporting period or, if the account was closed during such year, immediately before closure;
 
(5)     in the case of any Custodial Account:
 
(A)    the total gross amount of interest, the total gross amount of dividends,  and  the  total  gross  amount  of  other  income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the  account) during the calendar year or other appropriate reporting period; and
 
(B)     the  total  gross  proceeds  from  the  sale  or  redemption  of property paid or credited to the account
       during the calendar year  or other appropriate  reporting period with respect to which the Reporting
      United Kingdom Financial Institution acted as a  custodian, broker, nominee, or otherwise as an agent
       for the Account Holder;
 
(6)     in the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and
 
(7)     in the case of any account not described in subparagraph (5) or (6) of  this paragraph, the total gross amount paid or credited to the  Account   Holder  with  respect  to  the  account  during  the calendar year or other appropriate reporting period with respect to which the Reporting United Kingdom Financial Institution is the obligor  or   debtor,   including   the   aggregate   amount   of   any redemption  payments  made  to  the  Account  Holder  during  the calendar year or other appropriate reporting period.
 
b)      In the case of the United States, with respect to each United Kingdom Reportable Account of each Reporting
            U.S. Financial Institution:
 
(1)     the  name,  address,  and  date  of  birth  of  any  person  that  is  a resident of the United Kingdom and is an Account Holder of the account;
 
(2)     the account number (or the functional equivalent in the absence of an account number);
 
(3)     the name and identifying number of the Reporting U.S. Financial
Institution;
 
(4)     the gross amount of interest paid on a Depository Account;
 
(5)     the gross amount of U.S. source dividends paid or credited to the account; and
 
(6)     the gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 or 61 of subtitle A of the U.S. Internal Revenue Code.


 
ARTICLE 3
 
Time and Manner of Exchange of Information
 
1.      For  purposes  of  the  exchange  obligation  in  Article  2,  the  amount  and characterization of payments made with respect to a U.S. Reportable Account may be determined in accordance with the principles of the United Kingdom’s tax laws, and the  amount and characterization of payments made with respect to a United Kingdom Reportable Account may be determined in accordance with principles of U.S. federal income tax law.
 
2.      For  purposes  of  the  exchange  obligation  in  Article  2,  the  information exchanged   shall   identify   the   currency   in   which   each   relevant   amount   is denominated.
 
3.      With respect to paragraph 2 of Article 2, information is to be obtained and exchanged with respect to 2013 and all subsequent years, except that:
 
a)       In the case of the United Kingdom:
 
(1)     the information  to  be obtained  and exchanged with  respect  to 2013    and     2014    is     only    the   
         information    described    in subparagraphs (a)(1) to (a)(4);
 
(2)     the information  to  be obtained  and exchanged with  respect  to 2015  is  the  information  described  in
        subparagraphs  (a)(1)  to (a)(7),   except  for  gross  proceeds  described  in  subparagraph (a)(5)(B); and
 
(3)     the information  to  be obtained  and exchanged with  respect  to 2016  and  subsequent  years  is  the
        information  described  in subparagraph (a)(1) to (a)(7);
 
b)      In the case of the United States, the information to be obtained and exchanged  with  respect  to  2013  and  subsequent  years  is  all  of  the information identified in subparagraph (b).
 
4.      Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account that is a Preexisting Account,
       and subject to paragraph 4 of Article 6:
 
a)       subject to subparagraph (b) of this paragraph 4, if the U.S TIN is not in the records of the Reporting United Kingdom Financial Institution, the date of birth of the relevant person shall be provided; and
 
b)      the Parties are not required to obtain and  include in the  exchanged information the date of birth or the U.S. TIN, as applicable, of any relevant person if such date of birth or U.S. TIN is not in the records of the Reporting Financial Institution.
 
5.      Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 shall be exchanged within nine months after the end of the calendar year to which the information relates.   Notwithstanding the foregoing, the information that relates to calendar year 2013 shall be exchanged no later than September 30,2015.
 
6.      The Competent Authorities  of the United Kingdom and the United  States shall enter into an agreement under the
       mutual agreement procedure provided for in Article 26 of the Convention, which shall:
 
a)       establish   the   procedures   for   the   automatic   exchange   obligations described in Article 2;
 
b)      prescribe  rules  and  procedures  as  may  be  necessary  to  implement Article 5; and
 
c)       establish as necessary procedures for the exchange of the information reported under subparagraph 1(b) of Article 4.
 
7.      All information exchanged shall be subject to the confidentiality and other protections provided for in the Convention,
      including the provisions limiting the use of the information exchanged.
 
 
 
ARTICLE 4
 
Application of FATCA to United Kingdom Financial Institutions
 
1.      Treatment  of  Reporting  United  Kingdom  Financial  Institutions.  Each Reporting United Kingdom Financial Institution shall be treated as complying with, and not  subject to withholding under, section 1471 of the U.S. Internal Revenue Code if the United Kingdom complies with its obligations under Articles 2 and 3 with  respect  to  such  Reporting  United  Kingdom  Financial  Institution;  and  the Reporting United Kingdom Financial Institution:
 
a)       identifies U.S. Reportable Accounts and reports annually to HMRC the information required to be reported in subparagraph 2(a) of Article 2 in the time and manner described in Article 3;
 
b)      for each of 2015 and 2016, reports annually to HMRC the name of, each   Nonparticipating  Financial  Institution  to  which  it  has  made payments and the aggregate amount of such payments;
 
c)       complies  with  the  registration  requirements  applicable  to  Financial Institutions in Partner Jurisdictions;

d)      to the extent that a Reporting United Kingdom Financial Institution is (i) acting as a qualified intermediary (for purposes of section 1441 of the U.S.  Internal Revenue Code) that has elected to assume primary withholding  responsibility under  chapter 3 of subtitle A of the U.S. Internal Revenue Code, (ii) a foreign partnership that has elected to act as  a  withholding  foreign  partnership  (for  purposes  of  both  sections 1441 and 1471 of the U.S. Internal Revenue Code), or (iii) a foreign trust that has elected to act as a withholding foreign trust (for purposes of both  sections 1441 and 1471 of the U.S. Internal Revenue Code), withholds 30 percent of any U.S. Source Withholdable Payment to any Nonparticipating Financial Institution; and
 
e)       in the case of a Reporting United Kingdom Financial Institution that is not  described in subparagraph (d) of this paragraph and that makes a payment of,  or acts as an intermediary with respect to, a U.S. Source Withholdable  Payment  to  any  Nonparticipating  Financial  Institution, the Reporting  United  Kingdom Financial  Institution  provides  to any immediate  payor  of  such   U.S.  Source  Withholdable  Payment  the information  required  for   withholding  and  reporting  to  occur  with respect to such payment.
 
Notwithstanding the foregoing, a Reporting United Kingdom Financial Institution with respect to which the conditions of this paragraph are not satisfied shall not be subject  to  withholding  under  section  1471  of  the  U.S.  Internal  Revenue  Code unless such  Reporting United Kingdom Financial Institution  is identified by the IRS as a  Nonparticipating Financial Institution pursuant to subparagraph  2(b) of Article 5.
 
2.      Suspension of Rules Relating to Recalcitrant Accounts.  The United States shall not require a Reporting United Kingdom Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue Code), or to close such account, if the U.S. Competent Authority  receives  the  information  set  forth  in  subparagraph  2(a)  of Article  2, subject to the provisions of Article 3, with respect to such account.
 
3.      Specific Treatment of Retirement Plans.  The United States shall treat as a deemed-compliant FFI or exempt beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code United Kingdom retirement plans described  and  identified  in  Annex  II. For  this  purpose,  a  United  Kingdom retirement plan includes an entity established or located in and regulated in the United Kingdom, or a predetermined contractual or legal arrangement, operated to provide pension or retirement benefits or earn income for providing such benefits under the laws of the United Kingdom and regulated with respect to contributions, distributions, reporting, sponsorship, and taxation.

4.      Identification  and  Treatment  of  Other  Deemed-Compliant  FFIs  and Exempt  Beneficial Owners.   The United States shall treat each Non-Reporting United Kingdom Financial Institution as a deemed-compliant FFI or as an exempt beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code.
 
5.      Special  Rules  Regarding  Related  Entities  That Are  Nonparticipating Financial Institutions.  If a United Kingdom Financial Institution, that otherwise meets the requirements of paragraph 1 of this Article or is described in paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a jurisdiction that prevents  such  Related  Entity  or  branch  from  fulfilling  the  requirements  of a participating FFI or deemed-compliant FFI for purposes of section 1471 of the U.S. Internal Revenue Code, such United Kingdom Financial Institution shall continue to be in  compliance with the terms of this Agreement and shall continue to be treated as a  deemed-compliant  FFI or exempt beneficial owner for purposes of section 1471 of the U.S. Internal Revenue Code, provided that:
 
a)       the  United  Kingdom  Financial  Institution  treats  each  such  Related Entity or branch as a separate Nonparticipating Financial Institution for purposes  of  all  the  reporting  and  withholding  requirements  of  this Agreement and each  such Related Entity or branch identifies itself to withholding agents as a Nonparticipating Financial Institution;
 
b)      each  such  Related  Entity  or  branch  identifies its  U.S. accounts  and reports the information with respect to those accounts as required under section 1471 of the U.S. Internal Revenue Code to the extent permitted under the relevant laws pertaining to the Related Entity or branch; and
 
c)       such  Related  Entity  or  branch  does  not  specifically  solicit  U.S. accounts held by persons that are not resident in the jurisdiction where such   Related   Entity   or   branch   is   located   or   accounts   held   by Nonparticipating Financial Institutions  that are not established  in the jurisdiction where such branch or Related Entity is located, and such branch or Related Entity is not used by the United Kingdom Financial Institution  or  any other Related Entity to circumvent the obligations under  this  Agreement  or  under  section  1471  of  the  U.S.  Internal Revenue Code, as appropriate.
 
 
 
ARTICLE 5
 
Collaboration on Compliance and Enforcement
 
1.         Minor and Administrative Errors.  Subject to any further terms set forth in a competent authority agreement executed pursuant to paragraph 6 of Article 3, a Competent  Authority  can  make  an  inquiry  directly  to  a  Reporting  Financial Institution   in   the   other   jurisdiction   where   it   has   reason   to   believe   that administrative errors or other minor errors may have led to incorrect or incomplete information reporting or resulted in other infringements of this Agreement.   The competent  authority  agreement  may  provide  that  a  Competent  Authority  shall notify  the  Competent  Authority  of  the  other  Party  when  the  first-mentioned Competent Authority makes such an inquiry of a Reporting Financial Institution in the other  jurisdiction  regarding the Reporting  Financial  Institution’s compliance with the conditions set forth in this Agreement.
 
2.      Significant Non-compliance.
 
a)       A Competent Authority  shall notify  the Competent Authority  of the other   Party   when   the   first-mentioned   Competent   Authority   has determined that there is significant non-compliance with the obligations under this Agreement with respect to a Reporting Financial Institution in the other jurisdiction.  The Competent Authority of such other Party shall apply its domestic law (including applicable penalties) to address the significant non-compliance described in the notice.
 
b)      If, in the case of a Reporting United Kingdom Financial Institution, such  enforcement actions do not resolve the non-compliance within a period of 18 months after notification of significant non-compliance is first  provided,  the  United  States  shall  treat  the  Reporting  United Kingdom           Financial                          Institution as          a Nonparticipating Financial Institution.  The IRS shall make available a list of all Reporting United Kingdom Financial Institutions and other Partner Jurisdiction Financial Institutions that are treated as Nonparticipating  Financial Institutions pursuant to this paragraph.
 
3.      Reliance  on  Third  Party  Service  Providers.   Each  Party  may  allow Reporting Financial Institutions to use third party service providers to fulfill the obligations imposed on them by a Party, as contemplated in this Agreement, but these   obligations  shall  remain  the  responsibility  of  the  Reporting   Financial Institutions.
 
4.      Prevention  of  Avoidance.     The  Parties  shall  implement  as  necessary requirements to prevent Financial Institutions from adopting practices intended to circumvent the reporting required under this Agreement.
 
 
 
ARTICLE 6
 
Mutual Commitment to Continue to Enhance the Effectiveness of Information Exchange and Transparency
 
1.      Reciprocity.  The Government of the United States acknowledges the need to achieve  equivalent levels of reciprocal automatic information exchange with the United Kingdom.   The Government of the United States is committed to further improve  transparency  and  enhance  the  exchange  relationship  with  the  United Kingdom by pursuing the adoption of regulations and advocating and supporting relevant  legislation  to  achieve  such  equivalent  levels  of  reciprocal  automatic exchange.
 
2.      Treatment of Passthru  Payments and Gross Proceeds.   The Parties are committed to work together, along with other partners, to develop a practical and effective alternative approach to achieve the policy objectives of foreign passthru payment and gross proceeds withholding that minimizes burden.
 
3.      Development of Common Reporting and Exchange Model.   The Parties are committed to working with other partners, the Organisation for Economic Co- operation and Development, and the European Union, on adapting the terms of this Agreement to a common model for automatic exchange of information, including the development of reporting and due diligence standards for financial institutions.
 
4.      Documentation of Accounts  Maintained  as of January 1, 2014. With respect  to  Reportable Accounts  that  are  Preexisting  Accounts  maintained  by  a Reporting Financial Institution:
 
a)       The  United  States  commits  to  establish,  by  January  1,  2017,  for reporting with respect to 2017 and subsequent  years, rules requiring Reporting U.S. Financial Institutions to obtain and report the date of birth of each Account Holder of a United Kingdom Reportable Account as required pursuant to subparagraph 2(b)(1) of Article 2; and
 
b)      The United Kingdom commits to establish,  by January 1, 2017,  for reporting with respect to 2017 and subsequent  years, rules requiring Reporting  United  Kingdom  Financial  Institutions  to  obtain  the  U.S. TIN    of   each   Specified   U.S.   Person   as   required   pursuant   to subparagraph 2(a)(1) of Article 2.
 
 
 
ARTICLE 7
 
Consistency in the Application of FATCA to Partner Jurisdictions
 
1.      The United Kingdom shall be granted the benefit of any more favorable terms under Article 4 or Annex 1 of this Agreement relating to the application of FATCA to United Kingdom Financial Institutions afforded to another Partner Jurisdiction under a signed bilateral agreement pursuant to which the other Partner Jurisdiction commits to undertake the same obligations as the United Kingdom described in Articles 2 and 3 of this Agreement, and subject to the same terms and conditions as described therein and in Articles 5 through 9 of the Agreement.
 
2.      The United States shall notify the United Kingdom of any such more favorable terms and shall apply such more favorable terms automatically under this Agreement as if they were specified in this Agreement and effective as of the date of the entry into force of the agreement incorporating the more favorable terms.
 
 
 
ARTICLE 8
 
Consultations and Amendments
 
1.      In case any difficulties in the implementation of this Agreement arise, either Party may request consultations to develop appropriate measures to ensure the fulfillment of this Agreement.
 
2.      This Agreement may be amended by written mutual consent of the Parties. Unless otherwise agreed upon, such an amendment shall enter into force through the same procedures as set forth in paragraph 1 of Article 10.
 
 
 
ARTICLE 9
 
Annexes
 
The annexes form an integral part of this Agreement.
 
 
ARTICLE 10
 
Term of Agreement
 
1.      The Parties shall notify each other in writing when their necessary internal procedures for entry into force have been completed. The Agreement shall enter into force on the date of the later of such notifications, and shall continue in force until terminated.
 
2.      Either Party may terminate the Agreement by giving notice of termination in writing to the other Party.  Such termination shall become effective on the first day of the month following the expiration of a period of 12 months after the date of the notice of termination.
 
3.      The Parties shall, prior to December 31, 2016, consult in good faith to amend this Agreement as necessary to reflect progress on the commitments set forth in Article 6.
 
In  witness  whereof,  the  undersigned,  being  duly  authorized  thereto  by  their respective Governments, have signed this Agreement.
 
Done at  ........................................., in  duplicate, in English, this…………….…......... day of ……………………… , 2012.


FOR THE GOVERNMENT OF                                                                         FOR THE GOVERNMENT OF THE
THE UNITED STATES OF                                                                               UNITED KINGDOM OF GREAT
AMERICA:                                                                                                        BRITAIN AND NORTHERN IRELAND:







ANNEX I
 
DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S.
REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN NONPARTICIPATING FINANCIAL INSTITUTIONS
 
I.          General
 
A.      The  United  Kingdom  shall  require  that  Reporting  United  Kingdom  Financial Institutions  apply  the  due  diligence  procedures  contained  in  this Annex  I  to identify   U.S.  Reportable  Accounts  and  accounts   held  by  Nonparticipating Financial Institutions.
 
B.      For purposes of the Agreement,
 
1.       All  dollar  amounts  shall  be  read  to  include  the  equivalent  in  other currencies.
 
2.       The balance or value of an account shall be determined as of the last day of the calendar year or other appropriate reporting period. (LAST DAY OF CALENDAR YEAR OR REPORTING PERIOD)
 
3.       Where a balance or value threshold is to be determined as of the last day of a  calendar year under this Annex I, the relevant balance or value shall be determined as of the last day of the reporting period that ends with or within that calendar year.
 
4.       Subject  to  paragraph  II.E  (1),  an  account  shall  be  treated  as  a  U.S.
Reportable Account beginning as of the date it is identified as such pursuant to the due diligence procedures in this Annex I.
 
5.       Unless otherwise provided, information with respect to a U.S. Reportable Account shall be reported annually in the calendar year following the year to which the information relates.
 
C.      As an alternative to the procedures described in each section of this Annex I, the United Kingdom may allow its Reporting United Kingdom Financial Institutions to rely  on  the  procedures  described  in  relevant  U.S. Treasury  Regulations  to establish whether an account is a U.S. Reportable Account or an account held by a Nonparticipating Financial Institution.
 
II.        Preexisting Individual Accounts.    The  following  rules  and  procedures  apply  for identifying  U.S.  Reportable  Accounts  among  Preexisting  Accounts  held  by  individuals (“Preexisting Individual Accounts”).
 
A.      Accounts Not Required to Be Reviewed, Identified or Reported.  Unless the Reporting  United  Kingdom  Financial  Institution  elects  otherwise,  where  the implementing  rules  in  the  United  Kingdom  provide  for  such an  election,  the following accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:

 
1.        Subject  to  subparagraph  E  (2)  of  this  section,  Preexisting  Individual Accounts  with  a  balance  or  value  that  does  not  exceed  $50,000  as  of December 31, 2013.
 
2.       Subject  to  subparagraph  E  (2)  of  this  section,  Preexisting  Individual Accounts that are Cash Value Insurance Contracts and Annuity Contracts with a balance or value of $250,000 or less as of December 31, 2013.
 
3.       Preexisting Individual Accounts that are Cash Value Insurance Contracts or Annuity Contracts, provided the law or regulations of the United Kingdom or the United States effectively prevents the sale of Cash Value Insurance Contracts or Annuity  Contracts  to U.S. residents,  such as if the relevant Financial Institution does not have the required registration under U.S. law, and the law of the United Kingdom requires reporting or withholding with respect to insurance products held by residents of the United Kingdom.
 
4.       Any Depository Account with a balance or value of $50,000 or less.
 
B.     Review Procedures for Preexisting Individual Accounts With a Balance or Value as  of December 31, 2013, that Exceeds $50,000 ($250,000 for a Cash Value  Insurance  Contract  or  Annuity  Contract),  But  Does  Not Exceed $1,000,000 (“Lower Value Accounts”)
 
1.       Electronic  Record  Search.    The  Reporting  United  Kingdom  Financial Institution  must review  electronically  searchable  data  maintained  by the Reporting United Kingdom Financial Institution for any of the following U.S. indicia:
 
a)       Identification of the account holder as a U.S. citizen or resident;
 
b)      Unambiguous indication of a U.S. place of birth;
 
c)       Current  U.S.  mailing  or  residence  address  (including  a  U.S.  post office box or U.S. “in-care-of” address);
 
d)      Current U.S. telephone number;
 
e)       Standing instructions to transfer funds to an account maintained in the United States;
 
f)       Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or
 
g)       An “in-care-of” or “hold mail” address that is the sole address the Reporting United Kingdom Financial Institution has on file for the account holder.  In the case of a Preexisting Individual Account that is a Lower Value Account, an “in-care-of” address outside the United States shall not be treated as U.S. indicia.

2.       If none of the U.S. indicia listed in subparagraph B (1) of this section are discovered in the electronic search, then no further action is required until there is a change in circumstances described in subparagraph C (2) of this section with respect to the account that results in one or more U.S. indicia being associated with the account.
 
3.       If  any  of  the  U.S.  indicia  in  subparagraph  B  (1)  of  this  section  are discovered in the electronic  search, then the Reporting  United Kingdom Financial Institution must treat the account as a U.S. Reportable Account unless it elects to apply subparagraph B (4) of this section and one of the exceptions in such subparagraph applies with respect to that account.
 
4.      Notwithstanding a finding of U.S. indicia under subparagraph B (1) of this section, a Reporting United Kingdom Financial Institution is not required to treat an account as a U.S. Reportable Account if:
 
a)       Where  account holder  information unambiguously  indicates  a U.S. place  of birth, the Reporting United Kingdom Financial Institution obtains or has previously reviewed and maintains a record of:
 
(1)     a  self-certification  that  the  account  holder  is  neither  a  U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);
 
(2)     a non-U.S. passport  or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States; and
 
(3)     a copy of the account holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
 
(a)     the  reason  the  account  holder  does  not  have  such  a certificate despite renouncing U.S. citizenship; or
 
(b)     the   reason   the   account   holder   did   not   obtain   U.S. citizenship at birth.
 
b)      Where account holder information contains a current U.S. mailing or residence address, or one or more U.S. telephone numbers that are the   only  telephone  numbers   associated   with  the  account,  the Reporting   United   Kingdom  Financial  Institution   obtains   or  has previously reviewed and maintains a record of:
 
(1)     a self-certification that the account holder is not a U.S. citizen or resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and
 
(2)     a non-U.S. passport  or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States.
 
c)     Where account holder information contains standing instructions to transfer  funds to an account maintained in the United States, the Reporting   United   Kingdom  Financial  Institution   obtains   or  has previously reviewed and maintains a record of:
 
(1)     a self-certification that the account holder is not a U.S. citizen or resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); and
 
(2)    documentary  evidence,  as  defined  in  paragraph VI.D  of  this Annex I, establishing the account holder’s
       non-U.S. status.
 
d)     Where  account  holder  information  contains  a  currently  effective power of attorney or signatory authority granted to a person with a U.S. address,  has an “in-care-of”  address or “hold mail” address that is the sole address identified for the account holder, or has one or more U.S. telephone numbers (if a non-U.S. telephone number is also associated with  the account),  the Reporting  United Kingdom Financial Institution obtains or has previously reviewed and maintains a record of:
 
(1)     a self-certification that the account holder is not a U.S. citizen or resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form); or
 
(2)    documentary  evidence  as  defined  in  paragraph  VI.D  of  this Annex I, establishing the account holder’s non-U.S. status.
 
C.      Additional Procedures Applicable to Preexisting Individual Accounts That Are Lower Value Accounts
 
1.       Review of Preexisting Individual Accounts that are Lower Value Accounts for U.S. indicia must be completed by December 31, 2015.
 
2.       If  there  is  a  change  of  circumstances  with  respect  to  a  Preexisting Individual Account that is a Lower Value Account that results in one or more  U.S. indicia described in subparagraph B (1) of this section being associated  with  the  account,  then  Reporting  United  Kingdom  Financial Institution  must  treat  the  account  as  a  U.S.  Reportable  Account  unless subparagraph B (4) of this section applies.
 
3.       Except for Depository Accounts described in subparagraph A (4) of this section,  any Preexisting  Individual Account that has been identified  as a U.S.  Reportable  Account  under  this  section  shall  be  treated  as  a  U.S. Reportable  Account  in  all  subsequent  years,  unless  the  account  holder ceases to be a Specified U.S. Person.
 
D.      Enhanced Review Procedures for Preexisting Individual Accounts With  a Balance  or  Value  That  Exceeds  $1,000,000  as  of  December  31,  2013,  or December 31 of Any Subsequent Year (“High Value Accounts”)
 
1.       Electronic  Record  Search.    The  Reporting  United  Kingdom  Financial Institution  must review  electronically  searchable  data  maintained  by the Reporting United Kingdom Financial Institution for any of the U.S. indicia identified in subparagraph B (1) of this section.
 
2.       Paper  Record  Search.     If  the  Reporting  United  Kingdom  Financial Institution’s  electronically  searchable  databases  include  fields  for  and capture  all  of  the  information  identified  in  subparagraph  D  (3)  of  this section, then no  further paper record search is required.   If the electronic databases do not capture all of this information, then with respect to High Value Accounts, the Reporting United Kingdom Financial Institution must also review the current customer master file and, to the extent not contained in the current  customer  master  file, the  following  documents associated with the account and obtained by the Reporting United Kingdom Financial Institution within the last five years for any of the U.S. indicia identified in subparagraph B (1) of this section:
 
a)       the most recent documentary evidence collected with respect to the account;
 
b)      the most recent account opening contract or documentation;
 
c)       the  most  recent  documentation  obtained  by  the  Reporting  United Kingdom Financial Institution pursuant to AML/KYC Procedures or for other regulatory purposes;
 
d)      any power of attorney or signature authority forms currently in effect;
and
 
e)       any standing instructions to transfer funds currently in effect.
 
3.       Exception   Where   Databases   Contain   Sufficient   Information.   A Reporting United Kingdom Financial Institution is not required to perform the paper  record search described in subparagraph D (2) of this section if the   Reporting   United   Kingdom   Financial   Institution’s   electronically searchable information includes the following:
 
a)       the account holder’s nationality or residence status;
 
b)      the account holder’s residence address and mailing address currently on file with the Reporting United Kingdom Financial Institution;
 
c)       the account  holder’s  telephone number(s) currently on file, if any, with the Reporting United Kingdom Financial Institution;

d)      whether there are standing instructions to transfer funds in the account to  another  account  (including  an account  at another  branch  of the Reporting United Kingdom Financial Institution or another Financial Institution);
 
e)       whether there is a current “in-care-of” address or “hold mail” address for the account holder; and
 
f)       whether there is any power of attorney or signatory authority for the account.
 
4.       Relationship Manager Inquiry for Actual Knowledge.  In addition to the electronic and paper record searches described above, the Reporting United Kingdom Financial Institution must treat as U.S. Reportable Accounts any High  Value Accounts  assigned  to a relationship manager (including  any accounts  aggregated with  such account)  if  the  relationship  manager  has actual knowledge that the account holder is a Specified U.S. Person.
 
5.       Effect of Finding U.S. Indicia.
 
a)       If none of the U.S. indicia listed in subparagraph B (1) of this section are  discovered  in  the  enhanced  review  of  High  Value  Accounts described  above,  and  the  account  is  not  identified  as  held  by  a Specified U.S. Person in subparagraph D (4) of this section, then no further action  is  required  until  there  is  a change in  circumstances described in subparagraph E (4) of this section.
 
b)      If any of the U.S. indicia listed in subparagraph B (1) of this section are  discovered  in  the  enhanced  review  of  High  Value  Accounts described above, or if there is a subsequent change in circumstances that results  in  one or  more U.S. indicia  being associated  with  the account,  then  the  Reporting  United  Kingdom  Financial  Institution must   treat   the   account   as   a   U.S.   Reportable   Account   unless subparagraph B (4) of this section applies.
 
c)       Except for Depository Accounts described in paragraph A (4) of this section, any Preexisting Individual Account that has been identified as a U.S. Reportable Account under this section shall be treated as a U.S. Reportable Account in all subsequent years, unless the account holder ceases to be a Specified U.S. Person.
 
E.      Additional Procedures Applicable to High Value Accounts
 
1.       If  a  Preexisting  Individual  Account  is  a  High  Value  Account  as  of December 31, 2013, the Reporting United Kingdom Financial Institution must complete the enhanced review procedures described in paragraph D of this section with respect to such account by December 31, 2014.  If based on this review such account is identified as a U.S. Reportable Account, the Reporting United Kingdom Financial Institution must report the required information about such account with respect to 2013 and 2014 in the first report  on the Account. For all subsequent years, information  about the account should be reported on an annual basis.
 
2.       If  a  Preexisting  Individual Account  is  not  a  High  Value Account  as  of December 31, 2013, but becomes a High Value Account as of the last day of a   subsequent  calendar  year,  the  Reporting  United  Kingdom  Financial Institution  must  complete  the  enhanced  review  procedures  described  in paragraph D of this section with respect to such account within six months after the last day of the calendar year in which the account becomes a High Value Account.  If based on this review such account is identified as a U.S. Reportable Account, the Reporting  United Kingdom Financial Institution must report the required information about such account with respect to the year in which it is identified as a U.S. Reportable Account and subsequent years on an annual basis.
 
3.       Once  a  Reporting  United   Kingdom   Financial  Institution   applies  the enhanced review procedures set forth above to a High Value Account, the Reporting United Kingdom Financial Institution shall not be required to re- apply  such  procedures,  other  than  the  relationship  manager  inquiry  in subparagraph D (4) of this section, to the same High Value Account in any subsequent year.
 
4.       If there is a change of circumstances with respect to a High Value Account that results in one or more U.S. indicia described in subparagraph B (1) of this section  being associated with the account, then the Reporting United Kingdom Financial Institution must treat the account as a U.S. Reportable Account unless subparagraph B (4) of this section applies.
 
5.       A  Reporting   United   Kingdom   Financial   Institution   must   implement procedures to ensure that a relationship manager identifies any change in circumstances of an account.   For example, if a relationship manager is notified  that the account holder has a new mailing address in the United States,  the   Reporting   United  Kingdom  Financial  Institution  shall  be required to treat the new address as a change in circumstances and shall be required to obtain the appropriate documentation from the account holder.
 
III.     New Individual Accounts. The following rules and procedures apply for identifying U.S.  Reportable  Accounts  among  accounts  held  by  individuals  and  opened  on  or  after January 1, 2014 (“New Individual Accounts”).
 
A.      Accounts Not Required to Be Reviewed, Identified, or Reported.  Unless the Reporting  United  Kingdom  Financial  Institution  elects  otherwise  where  the implementing rules in the United Kingdom provide for such an election:
 
1.       A New Individual Account that is a Depository Account is not required to be reviewed, identified, or reported as a U.S. Reportable Account unless the account balance exceeds $50,000 at the end of any calendar year or other appropriate reporting period.
 
2.      A New Individual Account that is a Cash Value Insurance Contract is not required  to  be  reviewed,  identified,  or reported  as  a  U.S.  Reportable Account unless the Cash Value exceeds $50,000 at the end of any calendar year or other appropriate reporting period.
 
B.      Other New Individual Accounts.  With respect to New Individual Accounts not described in paragraph A of this section, upon account opening, the Reporting United Kingdom Financial Institution must obtain a self-certification which may be part of the account opening documentation, that allows the Reporting United Kingdom Financial Institution to determine whether the account holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the account holder is also a tax resident of another country)  and  confirm the reasonableness of such self-certification  based  on  the  information  obtained  by  the  Reporting  United Kingdom Financial  Institution in connection with  the  opening of the account, including any documentation collected pursuant to AML/KYC Procedures.
 
C.      If the self-certification establishes that the account holder is resident in the United States for tax purposes, the Reporting United Kingdom Financial Institution must treat the account as a U.S. Reportable Account and obtain a self-certification that includes the account holder’s U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).
 
D.     If there is a change of circumstances with respect to a New Individual Account that causes the Reporting United Kingdom Financial Institution to know or have reason to  know that the original self-certification is incorrect or unreliable, the Reporting United Kingdom Financial Institution cannot rely on the original self- certification and must obtain a valid self-certification that establishes whether the account holder is a U.S. citizen or resident for U.S. tax purposes.  If the Reporting United Kingdom Financial Institution is unable to obtain a valid self-certification, the Reporting United Kingdom Financial  Institution must treat the account as a U.S. Reportable Account.
 
IV.     Preexisting Entity Accounts. The following rules and procedures apply for purposes of  identifying  U.S. Reportable
    Accounts and accounts held by Nonparticipating Financial Institutions among Preexisting Accounts held by entities (“Preexisting
     Entity Accounts”).
 
A.      Entity  Accounts  Not  Required  to  Be  Reviewed,  Identified,  or  Reported.
Unless  the  Reporting  United  Kingdom  Financial  Institution  elects  otherwise, where  the  implementing  rules  in  the  United  Kingdom  provide  for  such  an election,  Preexisting Entity Accounts with account balances that do not exceed
$250,000 as of December 31, 2013, are not required to be reviewed, identified, or reported  as   U.S.  Reportable  Accounts  until   the  account  balance   exceeds $1,000,000.
 
B.      Entity Accounts Subject to Review.   Preexisting Entity Accounts that have an account  balance or value that exceeds $250,000 as of December 31, 2013, and Preexisting Entity Accounts that initially do not exceed $250,000 but the account balance of which later exceeds $1,000,000 must be reviewed in accordance with the procedures set forth in paragraph C of this section.
 
C.      Entity Accounts With Respect to Which Reporting is Required.  With respect to  Preexisting  Entity Accounts  described in paragraph B of this section,  only accounts that are held by one or more entities that are Specified U.S. Persons, or by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or residents shall be treated as U.S. Reportable Accounts.  In addition, accounts held by Nonparticipating Financial Institutions shall be treated as accounts for which aggregate payments as described in paragraph 1(b) of Article 4 of the Agreement are reported to HMRC.
 
D.      Review Procedures for Identifying Entity Accounts With Respect to Which Reporting is Required.  For Preexisting Entity Accounts described in paragraph B of this section, the Reporting United Kingdom Financial Institution must apply the following review procedures to determine whether the account is held by one or more Specified U.S. Persons, by Passive NFFEs with one or more Controlling Persons who are U.S. citizens  or residents, or by a Nonparticipating Financial Institution:
 
1.       Determine Whether the Entity is a Specified U.S. Person.
 
a)       Review    information    maintained    for    regulatory    or     customer relationship  purposes  (including  information  collected  pursuant  to AML/KYC   Procedures)   to   determine   whether   the   information indicates  that the entity account  holder is a U.S. Person.   For this purpose,  information  indicating  that  the  entity  is  a  U.S.  Person includes  a  U.S.  place  of  incorporation  or  organization,  or  a  U.S. address.
 
b)      If the information indicates that the entity account holder is a U.S.
Person,  the  Reporting  United  Kingdom  Financial  Institution  must treat the account as a U.S. Reportable Account unless it obtains a self- certification from the account holder (which may be on an IRS Form W-8 or W-9,  or  a  similar  agreed  form),  or  reasonably  determines based on information in its  possession or that is publicly available, that the account holder is not a Specified U.S. Person.
 
2.       Determine Whether a Non-U.S. Entity is a Financial Institution.
 
a)       Review    information    maintained    for    regulatory    or     customer relationship  purposes  (including  information  collected  pursuant  to AML/KYC   Procedures)   to   determine   whether   the   information indicates that the entity account holder is a Financial Institution.
 
b)      If  the  information  indicates  that  the  entity  account  holder  is  a Financial  Institution,  then  the  account  is  not  a  U.S.  Reportable Account.

3.       Determine  Whether  a  Financial  Institution  is  a  Nonparticipating Financial  Institution  Payments  to  Which  Are  Subject  to  Aggregate Reporting Under Paragraph 1(b) of Article 4 of the Agreement.
 
a)       Subject to subparagraph (b) of this paragraph, if the account holder is a  United Kingdom Financial Institution or other Partner Jurisdiction Financial   Institution,   then   no   further   review,   identification,   or reporting is required with respect to the account.
 
b)      A United Kingdom Financial Institution or other Partner Jurisdiction Financial Institution shall be treated as a Nonparticipating Financial Institution if it is identified as such by the IRS pursuant to paragraph
2 of Article 5 of the Agreement.
 
c)     If the account holder is not a United Kingdom Financial Institution or other  Partner  Jurisdiction  Financial Institution,  then  the  Reporting United  Kingdom  Financial  Institution  must  treat  the  entity  as  a Nonparticipating   Financial   Institution   payments   to                                                                                       which  are reportable under paragraph 1(b) of Article 4 of the Agreement, unless the Reporting United Kingdom Financial Institution:
 
(1)     Obtains a self-certification (which may be on an IRS Form W-8 or  similar  agreed  form)  from the  entity  that  it  is  a  certified deemed-compliant  FFI,  an  exempt  beneficial  owner,  or  an excepted  FFI,  as  those  terms  are  defined  in  relevant  U.S. Treasury Regulations; or
 
(2)     In  the  case  of  a  participating   FFI  or  registered  deemed- compliant FFI, verifies the entity’s FATCA identifying number on a published IRS FFI list.
 
4.       Determine Whether an Account Held by an NFFE is a U.S. Reportable Account.  With respect to an account holder of a Preexisting Entity Account that is not identified as either a U.S. Person or a Financial Institution, the Reporting United  Kingdom Financial Institution must identify (i) whether the  entity  has  Controlling  Persons,  (ii)  whether  the  entity  is  a  Passive NFFE, and (iii) whether any of the  Controlling Persons of the entity is a citizen or resident of the United States.  In making these determinations the Reporting United Kingdom Financial Institution should follow the guidance in  sub-paragraphs  (a)  through  (d)  of  this  paragraph  in  the  order  most appropriate under the circumstances.
 
a)       For purposes of determining the Controlling Persons of an entity, a Reporting   United   Kingdom   Financial   Institution   may   rely   on information   collected   and   maintained   pursuant   to   AML/KYC Procedures.
 
b)      For purposes of determining whether the entity is a Passive NFFE, the Reporting United Kingdom Financial Institution must obtain a self- certification (which may be on an IRS Form W-8 or W-9, or on a similar  agreed form) from the account holder to establish its status, unless it has information in its possession or that is publicly available, based  on  which  it  can  reasonably  determine  that  the  entity  is  an Active NFFE.
 
c)       For  purposes  of  determining  whether  a  Controlling  Person  of  a Passive  NFFE is a citizen  or resident of the United States for tax purposes, a Reporting United Kingdom Financial Institution may rely on:
 
(1)     Information  collected  and  maintained  pursuant  to AML/KYC Procedures in the case of a Preexisting Entity Account held by one  or  more  NFFEs  with  an  account  balance  that  does  not exceed $1,000,000; or
 
(2)     A self-certification (which may be on an IRS Form W-8 or W-9, or on  a similar agreed form) from the account holder or such Controlling Person in the case of a Preexisting Entity Account held  by  one  or  more  NFFEs  with  an  account  balance  that exceeds $1,000,000.
 
d)      If any Controlling Person of a Passive NFFE is a citizen or resident of the  United States, the account shall be treated as a U.S. Reportable Account.
 
E.      Timing  of  Review  and  Additional  Procedures  Applicable  to  Preexisting Entity Accounts
 
1.       Review of Preexisting Entity Accounts with an account balance or value that  exceeds $250,000  as of December 31, 2013, must be completed by December 31, 2015.
 
2.       Review of Preexisting Entity Accounts with a balance or value that does not exceed  $250,000 as of December 31, 2013, but exceeds $1,000,000 as of December 31 of  a subsequent year, must be completed within six months after the end of the  calendar year in which the account balance exceeds
$1,000,000.
 
3.       If there is a change of circumstances with respect to a Preexisting Entity Account that causes the Reporting United Kingdom Financial Institution to know   or   have   reason   to   know   that   the   self-certification   or   other documentation associated  with  an account  is incorrect or unreliable,  the Reporting  United  Kingdom  Financial  Institution  must  re-determine  the status  of  the  account  in  accordance  with  the  procedures  set  forth  in paragraph D of this section.
 
V.      New Entity Accounts. The following rules and procedures apply to accounts held by entities and opened on or after January 1,
       2014 (“New Entity Accounts”).
 
A.      The Reporting United Kingdom Financial Institution must determine whether the account holder is:  (i) a Specified U.S. Person; (ii) a United Kingdom Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, an exempt beneficial owner, or an excepted FFI, as those terms are defined in relevant U.S. Treasury Regulations; or (iv) an Active NFFE or Passive NFFE.
 
B.      A Reporting United Kingdom Financial Institution may determine that an account holder  is  an Active  NFFE,  a  United  Kingdom  Financial  Institution,  or  other Partner   Jurisdiction  Financial  Institution  if  the  Reporting  United  Kingdom Financial Institution reasonably determines that the entity has such status on the basis  of  information  that  is  publicly  available  or  in  the  possession  of  the Reporting United Kingdom Financial Institution.
 
C.      In all other cases, a Reporting United Kingdom Financial Institution must obtain a  self-certification  from  the  account  holder  to  establish  the  account  holder’s status.
 
1.       If  the  entity  account  holder  is  a  Specified  U.S.  Person,  the  Reporting United  Kingdom  Financial  Institution  must  treat  the  account  as  a  U.S. Reportable Account.
 
2.       If  the  entity  account  holder  is  a  Passive  NFFE,  the  Reporting  United Kingdom  Financial  Institution  must  identify  the  Controlling  Persons  as determined under AML/KYC Procedures, and must determine whether any such  person is a citizen or resident of the United States on the basis of a self-certification  from  the  account  holder  or  such  person.             If  any  such person is a citizen or resident of the United States, the account shall be treated as a U.S. Reportable Account.
 
3.       If the entity account holder is:  (i) a U.S. Person that is not a Specified U.S.
Person; (ii) subject to subparagraph C (4) of this section, a United Kingdom Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI, an exempt beneficial owner, or an  excepted FFI, as those terms are defined in relevant U.S. Treasury Regulations;  (iv)  an Active  NFFE;  or  (v)  a  Passive  NFFE  none  of  the Controlling Persons of which is a U.S. citizen or resident, then the account is not a U.S. Reportable Account and no reporting is required with respect to the account.
 
4.       If  the  entity  account  holder  is  a  Nonparticipating  Financial  Institution (including   a   United   Kingdom   Financial   Institution   or   other   Partner Jurisdiction  Financial  Institution  that  is  identified  by  the  IRS   as  a Nonparticipating Financial Institution pursuant to paragraph 2 of Article 5 of the Agreement), then the account is not a U.S. Reportable Account, but payments  to  the  account  holder  must  be  reported  as  contemplated  in paragraph 1(b) of Article 4 of the Agreement.

VI.     Special Rules and Definitions.  The following additional rules and definitions apply in implementing the due diligence
       procedures described above:
 
A.      Reliance  on  Self-Certifications  and  Documentary  Evidence. A Reporting United  Kingdom  Financial  Institution  may  not  rely  on  a  self-certification  or documentary  evidence  if  the  Reporting  United  Kingdom  Financial  Institution knows or has reason to know that the self-certification or documentary evidence is incorrect or unreliable.
 
B.      Definitions.  The following definitions apply for purposes of this Annex I.
 
1.       AML/KYC Procedures.    “AML/KYC  Procedures”  means the customer due   diligence  procedures  of  a  Reporting   United   Kingdom  Financial Institution pursuant to the anti-money laundering or similar requirements of the United  Kingdom to which such Reporting United Kingdom Financial Institution is subject.
 
2.       NFFE.    An  “NFFE”  means  any  Non-U.S.  Entity  that  is  not  an  FFI  as defined in relevant U.S. Treasury Regulations, and also includes any Non- U.S.  Entity  that  is  resident  in  the  United  Kingdom  or  other  Partner Jurisdiction and that is not a Financial Institution.
 
3.       Passive NFFE.  A “Passive NFFE” means any NFFE that is not an Active NFFE.
 
4.       Active NFFE.  An “Active NFFE” means any NFFE that meets any of the following criteria:
 
a)       Less than 50 percent of the NFFE’s gross income for the preceding calendar year or other appropriate reporting period is passive income and  less than 50 percent of the assets held by the NFFE during the preceding  calendar  year  or  other  appropriate  reporting  period  are assets that produce or are held for the production of passive income;
 
b)      The stock of the NFFE is regularly traded on an established securities market  or the NFFE  is a Related Entity  of an Entity  the stock of which is traded on an established securities market;
 
c)       The NFFE is organized in a U.S. Territory and all of the owners of the payee are bona fide residents of that U.S. Territory;
 
d)      The  NFFE  is  a  non-U.S.  government,  a  government  of  a  U.S. Territory, an international organization, a
     non-U.S.  central bank  of issue, or an Entity wholly owned by one or more of the foregoing;
 
e)       Substantially all of the activities of the NFFE consist of holding (in whole  or in part) the outstanding stock of, and providing financing and services  to, one or more subsidiaries that engage in trades  or


businesses other than the business of a Financial Institution, except that an  NFFE shall not qualify for this status if the NFFE functions (or holds itself  out) as an investment fund, such as a private equity fund, venture capital fund, leveraged buyout fund or any investment vehicle whose purpose is to acquire or fund companies and then hold interests in those companies as capital assets for investment purposes;
 
f)       The NFFE is not yet operating a business and has no prior operating history, but is investing capital into assets with the intent to operate a business other than that of a Financial Institution; provided, that the NFFE shall not  qualify for this exception after the date that is 24 months after the date of the initial organization of the NFFE;
 
g)       The NFFE was not a Financial Institution in the past five years, and is in the  process of liquidating  its  assets  or  is reorganizing  with  the intent to continue or recommence operations in a business other than that of a Financial Institution;
 
h)      The NFFE primarily engages in financing and hedging transactions with or  for Related Entities that are not Financial  Institutions,  and does not  provide  financing or hedging services to any Entity that is not a Related  Entity, provided that the group  of any such Related Entities  is  primarily  engaged  in  a  business  other  than  that  of  a Financial Institution; or
 
i)       The NFFE meets all of the following requirements:
 
(1)     It  is  established  and  maintained  in  its  country  of  residence exclusively for religious, charitable, scientific, artistic, cultural, or educational purposes;
 
(2)     It is exempt from income tax in its country of residence;
 
(3)     It has no shareholders or members who have a proprietary or beneficial interest in its income or assets;
 
(4)     The applicable laws of the Entity’s country of residence or the Entity’s  formation  documents  do  not  permit  any  income  or assets of the Entity to be distributed to, or applied for the benefit of, a private person or non-charitable Entity other than pursuant to the conduct of the Entity’s charitable activities, or as payment of   reasonable   compensation   for   services   rendered,   or   as payment representing  the fair market value of property which the Entity has purchased; and
 
(5)     The applicable laws of the Entity’s country of residence or the Entity’s formation  documents  require  that,  upon  the  Entity’s liquidation  or dissolution, all of its assets  be distributed to a governmental Entity or other non-profit organization, or escheat to the government of the Entity’s country of residence or any political subdivision thereof.
 
C.      Account Balance Aggregation and Currency Translation Rules
 
1.       Aggregation of Individual Accounts.   For purposes of determining the aggregate balance or value of accounts held by an individual, a Reporting United  Kingdom  Financial  Institution  shall  be  required  to  aggregate  all accounts    maintained   by   the   Reporting   United   Kingdom   Financial Institution, or  Related  Entities, but only to the extent that the Reporting United  Kingdom   Financial  Institution’s  computerized  systems  link  the accounts by reference to a data element such as client number or taxpayer identification number, and allow account balances to be aggregated.  Each holder of a jointly held account shall  be  attributed the entire balance or value of the jointly held account for purposes of applying the aggregation requirements described in this paragraph.
 
2.       Aggregation  of  Entity  Accounts.    For  purposes  of  determining  the aggregate  balance  or  value  of  accounts  held  by  an  Entity,  a  Reporting United Kingdom Financial Institution shall be required to take into account all accounts  held by Entities that are maintained by the Reporting United Kingdom Financial  Institution, or Related Entities, to the extent that the Reporting  United  Kingdom  Financial  Institution’s  computerized  systems link the accounts by reference to a  data element such as client number or taxpayer   identification   number   and   allow   account   balances   to   be aggregated.
 
3.       Special Aggregation Rule Applicable  to Relationship Managers.   For purposes of determining the aggregate balance or value of accounts held by a  person  to  determine  whether  an  account  is  a  High  Value Account,  a Reporting  United Kingdom Financial Institution shall also be required, in the case of any accounts that a relationship manager knows or has reason to know are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity) by the same person, to aggregate all such accounts.
 
4.       Currency Translation Rule.  For purposes of determining the balance or value of  accounts denominated in a currency other than the U.S. dollar, a Reporting  United Kingdom Financial  Institution  must convert the dollar threshold amounts  described in this Annex  I into such currency  using a published  spot  rate  determined  as  of  the  last  day  of  the  calendar  year preceding  the  year  in  which  the  Reporting  United  Kingdom  Financial Institution is determining the balance or value.
 
D.      Documentary Evidence.  For purposes of this Annex I, acceptable documentary evidence includes any of the following:
 
1.       A certificate of residence issued by an appropriate tax official of the country in which the payee claims to be a resident.

2.       With  respect  to  an  individual,  any  valid  identification   issued  by  an authorized government body (for example, a government or agency thereof, or a municipality), that includes the individual’s name and is typically used for identification purposes.
 
3.       With  respect  to  an  Entity,  any  official  documentation  issued  by  an authorized government body (for example, a government or agency thereof, or  a  municipality)  that  includes  the  name  of  the  Entity  and  either  the address of its principal office in the country (or U.S. Territory) in which it claims to be a resident or the country (or U.S. Territory) in which the Entity was incorporated or organized.
 
4.       With respect to an account  maintained in a jurisdiction with anti-money laundering rules that have been approved by the IRS in connection with a QI agreement (as described in relevant U.S. Treasury Regulations), any of the   documents   other   than   a   Form  W-8   or  W-9   referenced   in   the jurisdiction’s attachment to the QI agreement for identifying individuals or entities.
 
5.       Any financial statement, third-party credit report, bankruptcy filing, or U.S.
Securities and Exchange Commission report.


 
ANNEX II
 
NON-REPORTING UK FINANCIAL INSTITUTIONS AND PRODUCTS
 
General
 
This Annex II may be updated by a mutual agreement entered into between the Competent Authorities of the United Kingdom  and the United States:  (1) to include additional entities, accounts, and products that present a low risk of being used by U.S. Persons to evade U.S. tax and that have similar characteristics to the entities, accounts, and products identified in this Annex II as of the date  of entry  into force of the Agreement; or (2) to remove entities, accounts, and products that, due to changes in circumstances, no longer present a low risk of being used  by  U.S. Persons  to  evade U.S.  tax. Procedures  for  reaching such  a  mutual agreement may be included in the mutual agreement described in paragraph 6 of Article 3 of the Agreement.
 
I.  Exempt Beneficial Owners. The following categories of institutions are Non-Reporting United  Kingdom  Financial  Institutions  that  are  treated  as  exempt  beneficial  owners  for purposes of section 1471 of the U.S. Internal Revenue Code:
 
A.      UK Governmental Organisations
 
·        The Devolved Administrations as per:
o    the Northern Ireland Act 1998 (updated by The Northern Ireland (St Andrews Agreement) Acts 2006 & 2007, and the Northern Ireland Act 2009)
o    the Scotland Act 1998
o    the Government of Wales Act 2006
 
·        Local Government Authorities as per:
o    Section 33 of the Local Government Act 2003
o    the  Local  Government  Act  (NI)  1972  (as  amended  by  The  Local
Government  (Miscellaneous  Provisions)  Act  (NI)  2010  and  Local
Government Finance Act (NI) 2011)
o    the Local Government etc. (Scotland) Act 1994
o    the Local Government (Wales) Act 1994
 
B.     Central Bank
 
The Bank of England and any of its wholly owned subsidiaries.

C.        International Organisations

Any UK office of:
·        The International Monetary Fund
·        The World Bank
·        The International Bank for Reconstruction and Development
·        The International Finance Corporation
·        The International Finance Corporation Order, 1955 (SI 1955 No.1954)
·        The International Development Association
·        The Asian Development Bank
·        The African Development Bank
·        The European Community
·        The European Coal and Steel Community
·        The European Atomic Energy Community
·        The European Investment Bank
·        The European Bank for Reconstruction and Development
·        The OECD Support Fund
·        The Inter-American Development Bank
 
D.      Retirement Funds
 
Any pension scheme or other retirement arrangement established in the United Kingdom and described  in Article 3 (General Definitions)  of the Convention, including  pension  funds  or  pension  schemes  covered  by  IRS  Announcement
2005-30,   2005-1   C.B.   988,   on   the   Mutual   Agreement   on  U.K.  Pension
Agreements.
 
II.  Deemed-Compliant Financial Institutions. The following categories of institutions are Non-Reporting United Kingdom Financial Institutions that are treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code:
 
A.      Non-profit Organisations
 
·        Any entity registered as a charity with the Charity Commission of England and  Wales
·        Any entity registered with  HMRC for charitable tax purposes
·        Any entity registered as a charity with the Office of the Scottish Charity Regulator
·        Any Community Amateur Sports Club if registered as such with  HMRC
 
B.      Financial Institutions with a Local Client Base
 
1.      Any  Financial  Institution,  including  any  of  the  entities  listed  in  this subparagraph 1, that meets the requirements of subparagraph 2, below:
 
·        Credit  Unions  -  a  body  corporate  registered  under  the  Industrial  and Provident  Societies  Act  1965  as  a  credit  union  in  accordance  with  the Credit Unions Act or a body corporate registered under the Credit Unions (Northern  Ireland) Order 1985  or a body  corporate registered  under the Industrial and  Provident Societies Act (Northern Ireland) 1969 as a credit union
·        Industrial and Provident Societies - an industrial and provident society registered  or deemed to be registered under the Industrial  and Provident Societies Act 1965 (c. 12)
·        Friendly Societies - a friendly society within the meaning of the Friendly
Societies Act 1992 (c. 40)
·        Building  Societies  -  a  building  society  incorporated  or  deemed  to  be incorporated under the Building Societies Act 1986 (c. 53)
·        Mutual  Societies  -  as  defined  in  the  Building  Societies  (Funding)  and
Mutual Societies (Transfers) Act 2007
·        Investment  Trust  Companies  -  an  Investment  Trust  Company  where approved under Section 1158 of the Corporation Tax Act 2010 (CTA) and meets  the  requirements  of  The  Investment  Trust  (Approved  Company) (Tax) Regulations 2011 (S.I. 2011 No.2999)
·        Venture Capital Trusts – a Venture Capital Trust where approved as such by HM Revenue and Customs under Chapter 3 Income Tax Act 2007
 
2.       A Financial Institution meets the requirements of this subparagraph 2 if it meets all of the following requirements:
 
a).      The Financial Institution must be licensed and regulated under the laws of the United Kingdom;
 
b).     The Financial Institution must have no fixed place of business outside the
United Kingdom;
 
c).      The Financial Institution must not solicit account holders outside the United Kingdom. For this purpose, a Financial Institution shall not be considered to have  solicited  account  holders  outside  of  the  United  Kingdom  merely because  it   operates   a   website,   provided   that   the   website   does   not specifically  indicate  that  the  Financial  Institution  provides  accounts  or services to nonresidents or otherwise target or solicit U.S. customers;
 
d).     The Financial Institution must be required under the tax laws of the United Kingdom to perform either information reporting or withholding of tax with respect to accounts held by residents of the United Kingdom;
 
e).      At least 98 percent of the accounts  by  value provided  by the Financial Institution must be held by residents (including residents that are entities) of the United Kingdom or another Member State of the European Union;
 
f).      Subject to subparagraph 2(g), below, beginning on January 1, 2014, the Financial  Institution does not provide accounts to (i) any Specified  U.S. Person  who is not  a resident  of the United  Kingdom (including  a U.S. Person that was  a resident of the United Kingdom when the account was opened but subsequently  ceases to be a resident of the United Kingdom), (ii) a Nonparticipating  Financial Institution, or (iii) any Passive NFFE with Controlling Persons who are U.S. citizens or residents;
 
g).      On or before  January 1, 2014,  the Financial Institution  must implement policies and procedures to monitor whether it provides any account held by a  person   described  in  subparagraph  2(f),  and  if  such  an  account  is discovered, the Financial Institution must report such account as though the Financial   Institution   were   a   Reporting   United   Kingdom   Financial
Institution or close such account;
 
h).     With respect to each account that is held by an individual who is not a resident of the United Kingdom or by an entity, and that is opened                                   prior to the   date   that   the   Financial   Institution   implements   the   policies   and procedures described in subparagraph 2(g), above, the Financial Institution must review those accounts in accordance with the procedures described in Annex I applicable to Preexisting Accounts to identify any U.S. Reportable Account or  account held by a Nonparticipating Financial Institution,  and must  close  any  such  accounts  that  were  identified,  or  report  on  such accounts  as  though  the  Financial  Institution  were  a  Reporting  United Kingdom Financial Institution; and
 
i).      Each Related  Entity  of the Financial Institution  must be incorporated or organized in the United Kingdom and must meet the requirements set forth in this paragraph.
 
III.       Exempt Products.  The following categories of accounts and products established in the United Kingdom and maintained by
      a United Kingdom Financial Institution shall not be treated as Financial Accounts, and therefore shall not be U.S. Reportable
       Accounts, under the Agreement:
 
A.      Certain Retirement Accounts or Products
 
·        Pension schemes registered with HMRC under Part 4 of the Finance Act
2004 and pension arrangements where the annual contributions are limited to £50,000 and funds contributed cannot be accessed before the age of 55 except in circumstances of serious ill health.
 
·        Those that are UK-registered pension arrangements (including authorised payments) as set out in the Finance Act 2004 that are excluded from the definition  of  Financial  Account  pursuant   to  Article   1(s)(3)   of  the Agreement.
 
B.      Certain Other Tax-Favoured Accounts or Products
 
·        Individual Savings Accounts (ISAs) - as defined in the Individual Savings Account Regulations 1998 (SI 1998 No.1870) and subsequent Amendment Regulations
·        Junior ISAs - as defined in the Individual Savings Account Regulations 1998 No.1870, and subsequent Amendment Regulations
·        Child Trust Funds - as defined in the Child Trust Funds Act 2004 and subsequent Amendment Regulations
·        Premium  Bonds  -  where  issued  by  NS&I  (UK  National  Savings  and Investments)
·        Children’s Bonus Bonds - where issued by NS&I (UK National Savings and Investments)
·        Fixed Interest Savings Certificates - where issued by NS&I (UK National Savings and Investments)
·        Index Linked Savings Certificates - where issued by NS&I (UK National Savings and Investments)
·        Tax Exempt Savings Plans - where issued by a friendly society within the meaning of the Friendly Societies Act 1992 (c. 40)
·        Save As You Earn Share Option Schemes - approved by HMRC under Schedule 3 Income Tax (Earnings and Pensions) Act 2003
·        Share Incentive Plans - approved by HMRC under Schedule 2 Income Tax (Earnings and Pensions) Act 2003
·        Company Share Option Plans - approved by HMRC under Schedule 4 Income Tax (Earnings and Pensions) Act 2003


alttag