There are areas where it was not appropriate for UK CDOT to exactly mirror US FATCA due to differences in context.
Asset managers have been closely monitoring the evolution of guidance on the application of US FATCA to funds resident in key jurisdictions. Several jurisdictions that are relevant to the asset management industry are also now subject to a UK equivalent regime (commonly referred to as UK CDOT) that is in place between the UK and the 10 Crown Dependencies (CDs) and Overseas Territories (OTs). The 10 jurisdictions in which UK CDOT applies are Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey, the Isle of Man, Jersey, Montserrat, and the Turks and Caicos Islands. Guidance issued by the UK, the Cayman Islands, and the CDs of Jersey, Guernsey, and the Isle of Man has highlighted some of the ways in which the two regimes will interact.
The introduction of the UK CDOT regime has raised questions as to how this new regime would interplay with US FATCA. Her Majesty’s Revenue and Customs (HMRC) has described in guidance notes that its intent was to maximize consistency between the US/UK intergovernmental agreement (IGA) and those negotiated between the CDs and OTs so as to minimize additional costs and burdens to businesses trying to comply with both regimes. However, HMRC noted that there were areas where it was not appropriate to exactly mirror the US model due to differences in context.
This Insight highlights three such differences which are of particular relevance to asset managers: