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Automatic Exchange of Information (AEOI) - detecting and deterring tax evasion

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Barclays New York

New international agreements involving a large number of countries have been coming into force recently in order to assist tax authorities to deter and detect tax evasion especially relating to assets held in countries where the owner is not resident for tax purposes.

These international agreements, when implemented, create a legal obligation requiring all financial institutions, including Barclays, to:

  • obtain extra information from customers;
  • identify a possible connection, for tax purposes, with another  country / other countries;
  • establish the tax residence of all account holders; and
  • report the financial account information for identified customers to the relevant tax authorities. 
  • Barclays is now required by law to obtain additional information and documentation from customers, both corporate and individuals, in order to correctly identify a person’s residence for tax purposes when opening a new account.  Ordinarily a person will be tax resident in the jurisdiction where they live and pay tax. However, for the purposes of complying with our legal obligations relating to the identification of U.S. Persons, this identification is also based on US citizenship and not just in relation to the country where the person lives.

    Barclays is also required to review existing accounts to ensure that individual and entity accounts are correctly identified, classified and reported where required. In some cases this will require Barclays to request further information or documentation from existing customers.

    Barclays will contact customers if additional documentation or information is required to establish an account holder’s tax residence and/or US citizenship.

    In order to maintain the correct information we require our customers to inform us of any change in circumstances that would impact on their tax residency and/or US citizenship. If you are unsure about  your tax residency status and/or US citizenship, please contact your professional tax adviser or your local tax authority.

    Many tax authorities offer assistance and opportunities for taxpayers to get their tax affairs in order if they are concerned that they may have undisclosed income and gains. You may wish to wish to speak with a professional tax adviser who can help you.

    The HMRC Worldwide Disclosure Facility (WDF) is designed for UK taxpayers to regularise their tax affairs in advance of the information exchange under the Automatic Exchange of Information (AEOI) agreements.  Information regarding the HMRC WDF is available in link below.

    Please note Barclays does not provide tax advice.

    HMRC Worldwide Disclosure Facility HMRC Worldwide Disclosure Facility HMRC Quick Guide: Automatic Exchange of Information – information for account holdersHMRC Quick Guide: Automatic Exchange of Information – information for account holders (new window) FATCA and the UK’s Automatic Exchange of Information Agreements aiming to combat tax evasionFATCA and the UK’s Automatic Exchange of Information Agreements aiming to combat tax evasion (new window) Further information on FATCA from the US Inland Internal Revenue Service (IRS)Further information on FATCA from the US Inland Internal Revenue Service (IRS) Further information about CDOT (HMRC UK agreements) Further information about CDOT (new window)
  • Under these agreements all financial institutions, including Barclays, have a legal obligation to report customers’ financial account information to the relevant tax authorities based on tax residency and/or US citizenship.

    These customer information returns include relevant financial account information such as, names, addresses, country of tax residency, tax identification number, balances, interest, dividend payments and gross proceeds in connection with disposals.

    We are required to use the information we have collected from customers to determine whether or not they should be included in any relevant information returns to HMRC or other tax authorities. If we request information from customers that would enable us to exclude them from the reporting requirements and are unable to obtain it, the legislation requires that their financial account details be automatically included in the returns to the relevant tax authorities.

  • FATCA is a piece of US legislation that was designed to improve tax compliance by US persons, both individuals and entities, as they are required to report their worldwide income to the US Internal Revenue Service (IRS) on an annual basis, regardless of whether or not they currently reside in the US.  FATCA requires global financial institutions to identify all reportable US persons within their client base and provide information on such accounts to the appropriate tax authorities.

    Since January 2015, Barclays has been required to annually report information to the tax authorities concerning the accounts of US persons and certain US owned entities. The reports are submitted either to local tax authorities or directly to the IRS if the country does not have an Intergovernmental Agreement (IGA) in place. Where the information is provided to local tax authorities, this will subsequently be sent to the IRS by them. 

    Find out more about FATCA on the IRS website Find out more about FATCA on the IRS website (new window)

    FATCA Withholding Tax

    To encourage compliance with the FATCA requirements to identify US owned accounts, the US introduced a 30% withholding tax on non compliant parties that may be applied to US source income in certain circumstances, as follows:

    • Entities may suffer the withholding tax if they fail to provide the required documentation and be classified as non compliant.
    • Individuals may suffer the withholding tax if they fail to provide the required documentation and are classified as recalcitrant. Individuals with accounts in countries that have signed an Intergovernmental Agreement with the US may be reported if not fully documented.

    Barclays GIIN

    The Barclays Group has registered with the IRS for FATCA purposes and the GIIN for Barclays Bank PLC in the UK is E1QAZN.00001.ME.826.

    If you require a GIIN for another part of the Barclays Group or a Barclays branch outside the UK, please contact your usual Barclays contact to obtain the GIIN for that entity or branch.

    For your information, the IRS list of all registered Foreign Financial Institutions is publicly available on the link below and the IRS plan to update this list monthly.

    FATCA Foreign Financial Institution (FFI) FATCA Foreign Financial Institution (FFI) (new window)
  • The UK has signed agreements that are similar to FATCA, with each of the Crown Dependencies (Jersey, Guernsey and the Isle of Man) and Gibraltar. These agreements create a reciprocal obligation for the tax authorities in the UK and those territories to exchange certain financial account information. Therefore, in return for information that the tax authorities in the Crown Dependencies and Gibraltar send to HM Revenue & Customs (HMRC), they will receive information from HMRC in relation to tax residents in those territories who hold accounts in the UK.

    The UK has also signed agreements with the governments of the Overseas Territories (OT), the OT consists of Cayman Islands, Gibraltar, Montserrat, Bermuda, the Turks and Caicos Islands, the British Virgin Islands and Anguilla. However these agreements are not reciprocal and only HMRC will receive financial account information in relation to accounts maintained in those territories owned by UK reportable persons identified in those territories.

    From 31 May 2016, Barclays will be required to submit information on reportable financial accounts to HMRC, the Crown Dependencies and Overseas Territories tax authorities. 

  • In addition to the US and UK agreements, a further multilateral agreement (typically referred to as the OECD Common Reporting Standard (CRS)) was signed in October 2014 by over 50 countries (Early Adopters), including the UK. The CRS aims to combat tax evasion on a global scale by sharing information on financial accounts where there is an indication of the account holder having a connection for tax purposes with another participating jurisdiction.  These regulations will start to come into force with effect from 1st January 2016. The list of participating countries is expanding with around a further 50 countries currently signed up to these agreements which will be effective from 1 January 2017 onwards.

    For Early Adopters, Barclays will be required to collect information from customers from 1 January 2016 and start reporting to relevant tax authorities from 2017.

    It is expected that the identification and reporting obligations under CDOT will be replaced by the obligations under the CRS following the introduction of the CRS. 

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