IEIM722020 - When Does a Reportable Taxpayer Have to Report

The primary reporting obligation under the Regulations is on anyone who is an intermediary in relation to a CRS avoidance arrangement and opaque offshore structure. The requirement for a reportable taxpayer to report an arrangement to HMRC therefore only applies if there is no intermediary who is required to report the required information in relation to the arrangement. This could be because there is no intermediary involved in the arrangement (for example if the arrangement is designed and implemented by a company’s in-house tax team with no external help). However, it is likely that the reportable taxpayer is also an intermediary in this case. It could also apply if any intermediaries involved in the arrangement do not have an obligation to report the arrangement in the UK, notwithstanding their participation in the arrangement. This could be the case if the intermediary has no connection with the UK, and so none of the tests in regulation 3 are met (see IEIM721020). Here the reporting requirement will fall to the reportable taxpayer who is resident in the UK. However, if the reportable taxpayer has evidence that this information has been disclosed to a partner jurisdiction, operating rules that are substantially similar, then this information is not required to be reported. Intermediaries may also not be required to report information if it is protected by legal professional privilege.

Where this is the case (that there is not a primary reporting obligation required of an intermediary or an intermediary has not already disclosed the information to a partner jurisdiction) if the reportable taxpayer is resident in United Kingdom and the user of a CRS avoidance arrangement or the beneficial owner under an opaque offshore structure then the reportable taxpayer is required to disclose information.

The information that must be reported in relation to a CRS avoidance arrangement and opaque offshore structure is set out at IEIM740070. Where a reportable taxpayer holds information in relation to a CRS avoidance arrangement and opaque offshore structure which an intermediary does not hold (for example their full address or National Insurance number), the reportable taxpayer may provide that information to the intermediary so that they can report the information, rather than requiring the reportable taxpayer to make an additional report.

It is often the case that a reportable taxpayer will be a client of the intermediary. “Client is defined in rule 1.4(d) of the OECD rules.

(d) “Client”, in respect of an Intermediary, means any person who requests an Intermediary to, or on whose behalf, or for whose benefit, the Intermediary:

(i) make(s) a CRS Avoidance Arrangement or Opaque Offshore Structure available for implementation; or

(ii) provide(s) Relevant Services in respect of a CRS Avoidance Arrangement or Opaque Offshore Structure.

Normally the intermediary would have the primary reporting obligation if the client were a reportable taxpayer. However, in circumstances such as where legal professional privilege exempts the intermediary from reporting such privileged information the client would have to report as a reportable taxpayer.

There are circumstances where the client may not be a reportable taxpayer. If the client is another intermediary, then they may have to report as an intermediary, subject to any exemptions such as legal professional privilege. There may even be circumstances where the client is neither a reportable taxpayer nor an intermediary. (This would be unusual as the definition of “client” is closely linked to CRS avoidance arrangement or opaque offshore structure.) In this case, the client would not have a reporting obligation, although other intermediaries or reportable taxpayers still might. For the client to have a reporting obligation the client has to be an intermediary or a reportable taxpayer.