UK resident trusts will soon no longer be required to file FATCA reports for nil returns, following changes by the US Internal Revenue Service.
An addition to the IRS frequently asked questions (FAQ) was made at the end of February. The new FAQ C19 states:
”Only direct reporting non-financial foreign entities (NFFEs) are required to submit nil reports. For all other entities, submission of nil reports is not mandatory and submission of these reports is optional. While nil reporting might not be required by the IRS, it might be required by the local jurisdiction. Please check with your local tax administration. Nil reports that are submitted must provide reporting FI information. The report contains reporting group, but it does not contain any account reports or pooled reports. Reporting group can be empty or can contain Sponsor or Intermediary information.”
All UK resident entities (those classed as financial institutions as well as those that are NFFEs), are not direct reporting NFFEs and are not required by the IRS to submit nil returns.
HM Revenue & Customs (HMRC) will amend its FATCA regulations to make them consistent with the IRS requirements.
If an entity has already registered for FATCA with HMRC, and under the current HMRC regulations it would be appropriate for them to issue a nil return, that entity can choose to submit a nil report or wait until the HMRC has amended its regulations and then choose not to submit a report. Those entities who have already filed a nil return with HMRC do not need to take any further action.