IEIM404880 - Charities: Due diligence: Self-certification

IEIM404880: Charities: Due diligence: Self-Certification

When a new account is opened, that is a new debt or equity interest in an Investment Entity is established, such as a grant is made to a new recipient, the charity must obtain a self-certification. The self-certification establishes where the recipient is tax resident, and for entities the status of the entity. This is done for all Account Holders [see IEIM404740] to enable the charity to identify those tax resident outside the UK and in a Reportable Jurisdiction.

It is expected that charities will adopt processes that facilitate the collection of self-certifications as part of the grant making process. It can be done face to face, online, by telephone or through correspondence.

Format of self-certification

There is no prescribed format, a self-certification may form part of other information collected when a grant is set up or paid. Whatever the form taken, it must allow the charity to determine the recipient’s tax residence(s) and confirm the reasonableness of that self-certification based on other information held or received as part of the process [see IEIM404940].

A self-certification must be signed by the Account Holder, or a person authorised to do so on his/her behalf; or where part of a verbal process, it must be positively affirmed and that affirmation recorded. Self-certification is required for all accounts, even those in the name of minors.

The following information must be included in a self-certification; it can be part of a two-stage process, so where it is established that the account holder is UK tax resident then it will only be necessary to gather the information in the first three bullet points below (four where the self-certification is for an entity). Otherwise, self-certifications must include all of the following information:

• Name
• Address
• Jurisdiction(s) of tax residence
• Entity status (entities only) [see IEIM404920]
• Tax Identification Number(s) in respect of all reportable jurisdictions [see IEIM402060]
• Date of birth (individuals only)

The self-certification may be provided in any manner and in any form, for example it can be in paper or electronic format, and charities should look to where it can be included in existing information gathering, where possible. The CRS allows that the self-certification can be a ‘tick box’, where an individual account holder provides their name and address and certifies their jurisdiction of tax residence; if this is the UK, no further information need be provided. As above, the self-certification may also be a verbal affirmation of the jurisdiction of tax residence, and additional information only gathered for those tax resident outside of the UK. Charities working in the community, making small grants to individuals may find this approach helpful, especially where grant recipients are in distress or otherwise outside mainstream financial services.

If the self-certification is provided electronically, the charity must have systems in place to ensure that the information provided is that of the account holder and it must be able to provide a hard copy of all such self-certifications to HMRC on request.

Where the charity is unable to obtain any valid self-certification within 90 days of opening the account, and there are no indicia of residence in any jurisdiction other than the UK, then the account is not reportable. However if there are indicia of residence in reportable jurisdictions other than the UK, then the account is reportable to those other jurisdictions.