Operational Taxes for Banks 2024 Conference Takeaways

Operational Taxes for Banks London conference

On Tuesday May 14th, TAINA representatives attended the Operational Taxes for Banks Conference in London. A great panel on Internal Governance and Collaboration within CRS by Jenny Turner (Executive Director, Group Tax at UBS), Malcome White (Head of Client Tax Governance at HSBC) and David Smith (CRS Lead at HMRC), provided significant insights into the evolving landscape of tax information reporting.

Some key takeaways of noteworthy topics that interested the audience of tax professionals and experts included.

Conference Key Takeaways

• Inclusion of the UK as a Reportable Jurisdiction for UK FIs
• Introduction of CRS 2.0 and New Reporting Schemas
• Emerging reporting data requirements
• CARF and Electronic Money Products

Inclusion of the UK as a Reportable Jurisdiction for UK FIs

One of the prominent topics was the proposal to include the UK as a reportable jurisdiction under CRS for UK FIs. This inclusion would bring several challenges for FIs:

• Document Collection for Domestic Residents: Many FIs may not have previously collected certain documents from domestic residents, posing a new compliance and reporting data challenge.
• HMRC Exemptions: HMRC is considering possible exemptions, although these would be internal to the UK and have no international ramifications.
• Increased Volume of Reportable Accounts: There is concern over the significant increase in reportable account holders, along with the corresponding data points. Notably, the absence of Tax Identification Numbers (TINs) for certain individuals and non-taxable entities could complicate reporting.
• Public Awareness Campaigns: A suggestion was made for HMRC to conduct public relations campaigns like those for self-assessment, informing individuals of the need to provide their TINs when requested by their banks. This would also help address the wider issue pertaining to key data points that FIs often struggle to collect.

Moreover, it was noted that CRS data for UK domestic account holders may even be challenging for HMRC use due to its calendar basis, which does not align with the UK fiscal year.

New Reporting Schemas

The panel discussed the timeline and details for the new schemas:

• Finalization and Release: The OECD is currently finalizing the CARF schema, which is expected to be released imminently. Reporting under this schema will be due in 2027 and may vary slightly based on country.
• CARF and CRS 2.0: The Crypto-Asset Reporting Framework (CARF) will have a separate XML schema from CRS, as CARF deals with transactional data.
• Multiple Schemas for Reporting: By 2027, all applicable jurisdictions will need to adopt the new schemas for reporting year 2026. By then, firms may be required to report under multiple tax regimes with UK firms potentially having to report under:
  • CRS
  • CARF
  • FATCA – IRS reporting of US persons with non-US financial accounts
  • BBSI - HMRC specific reporting of interest income

CRS 2.0 Emerging Data Points and Definitions

The panel highlighted several new reporting data points and technical definitions that will be integral to CRS 2.0 reporting. This is also a time to remind that as new jurisdictions join CRS, the requirements may apply differently between countries. Items highlighted include:

• New vs. Pre-existing Accounts: A new requirement for the distinguishing of New vs Pre-existing accounts. There will be a need for a clear technical definition to distinguish between new and pre-existing accounts.
• Joint Accounts: Reporting will now likely require the inclusion of the total number of joint account holders, whether reportable or not, to provide context regarding total income and balances.
• Account Types: Further guidance will be required to accurately report different account types.
• Controlling Person Type: Reporting will likely need to cover all applicable roles of controlling persons, which could include multiple roles for a single entity. This includes considering the role of a person controlling an entity that, in turn, controls the reportable entity.

CARF and Electronic Money Products

Finally, the panel touched on the complexities surrounding CARF. Beyond the added burden of tracking transaction level data for reporting, there was much discussion particularly in relation to electronic money products:

• Classification Challenges: It can be challenging to determine if a product is genuinely a crypto asset or electronic money. For example, stablecoins tied to fiat currency are still considered to be tokens, further clarity required on whether they fall under CARF or CRS 2.0.

How Can TAINA Help?

Overall, the conference underscored the evolving and complex nature of global financial reporting standards. The addition of the UK as a reportable jurisdiction for UK FIs, the introduction of CRS 2.0, and the detailed requirements for new data points will require significant adjustments from financial institutions and regulatory bodies alike. The proactive steps by the OECD and HMRC, including potential public awareness campaigns, will be crucial in ensuring smooth implementation and compliance.

Many items discussed will drive a change in policies and procedures, plus create new documentation requirements. Now more than ever it is important to think of an automated solution in the tax operations space and focus on automating repetitive processes. There are limits to how much we can stretch internal resources.

The TAINA Platform takes care of your CRS Self Certification Form collection and validation, as well as maintaining FATCA and CRS reporting compliance in a seamless end-to-end process. Attending these types of events ensures TAINA is maintaining an up to date, robust and detailed ruleset meeting our clients' needs.

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organization.

For more information on how our fully automated platform can add value to your business, get in touch or request a demo to see it in action.