IEIM404820 - Charities: Due diligence: Introduction

IEIM404820: Charities: Due diligence: Introduction

Due diligence requirements apply to all the Financial Accounts [see IEIM404740] that a Financial Institution maintains. The Regulations require Financial Institutions to identify and maintain information about the tax residence of Account Holders, irrespective of whether they are resident in a Reportable Jurisdiction, this is referred to as the wider approach [see IEIM400140]. Financial Institutions are required to carry out due diligence procedures on Financial Accounts to establish if the account holder is resident in one or more reportable jurisdictions.

If the account holder is resident in a jurisdiction with which the UK has agreed to exchange data then they are a Reportable Person and the account is a Reportable Account [see IEIM402505].

The following gives additional due diligence guidance for charities that are Financial Institutions, and does not replace the full due diligence guidance in IEIM402505 et seq. It should be read in conjunction with the full guidance where further clarification is required.

Notifying Account Holders

In accordance with regulation 10 of the 2015 Regulations there is a requirement for reporting Financial Institutions to notify each individual Reportable Person that information relating to that person which is required to be reported under the AEOI agreements will be reported to HMRC and may be transferred to the government of another territory in accordance with a relevant agreement. The notification must be made by 31 January in the calendar year following the first year in which the account held by the individual is a Reportable Account maintained by the Reporting Financial Institution (for example – if a grant is made to a recipient in 2016 that person must be notified by 31 January 2017). This requirement is intended to provide good time for the notification to be provided to customers ahead of their data being sent to HMRC by 31 May annually.

The notification may be made either in a direct communication to the Account Holder, or by way of general communications such as updates to terms and conditions or part of correspondence when a grant is arranged, and in any case may be made electronically or by paper communication. It may also be included in the self-certification. Note that this is a ‘one-off’ requirement and there is no requirement to repeat the process once completed for a particular account.