FATCA HMRC guidence notes (DRAFT)

http://www.hmrc.gov.uk/drafts/uk-us-fatca-guidance-notes.pdf

2.9 Local Client Base Financial Institution section is interesting. Would this mean that building societies would be exempt? What about main high street banks that have "international" branches. Would the U.K branches be considered part of the banking "group" and thus deemed none compliant financial institutions?

Looking at 7 Pre-existing Entity Accounts, it would seem that providing the account balance is under $250,000 as of December 31st 2013, then no reporting is necessary.

I think any UK FFI is going to look at this and think US persons are more trouble than they are worth. They won't offer accounts to US persons and they'll close the ones they have. This is already happening in Switzerland and other places. A US person financial ghetto will open up with limited services and high fees. It seems like renouncing will become unavoidable for a US person trying to live in the UK for the longer term.

Good find, Barcrest.

http://www.hmrc.gov.uk/drafts/uk-us-fatca-guidance-notes.pdf
2.9 Local Client Base Financial Institution section is interesting. Would this mean that building societies would be exempt?

Two questions: (honest questions, I'm not trying to a smart a$$)
First, what do you mean by exempt?
2.2: Depending on the nature of the exemption an entity may either be entirely exempted from complying with the legislation or its compliance obligations may be reduced,....
2.8(ii): Financial Institutions with a local client base will have a reduced reporting requirement if they meet the criteria set out in 2.9
I read this as the FFI with a local client base is not exempt, but could have a reduced reporting requirement if it meets the 9 criteria in 2.9.

Second, which Building Society are you talking about? Read 2.9(c) and 2.9(d) carefully.
2.9(c): Each Related Entity of the Financial Institution must be incorporated or organised in the United Kingdom and must meet the requirements set forth in this paragraph. So all group entities must comply with all the criteria and must all be located within the United Kingdom.
2.9(d): The Financial Institution must not solicit account holders outside the United Kingdom.

Birmingham Midshires is usually viewed as a building society. On it's website, in the fine print, it says "This site is intended for UK residents unless otherwise stated." and "Birmingham Midshires is a division of Bank of Scotland plc" Bank of Scotland (HBOS) is owned by the Lloyds Banking Group. Does Lloyds solicit business from outside the UK? My guess is yes.

Coventry Building Society states in its fine print "This site is intended for UK residents only." Coventry is a TLC (a mutual society), not a PLC. It is not owned by one of the larger banks. My guess would be that it has a better shot at reduced reporting requirements.

My purely idiots opinion is that this Guidance is incomplete, and is subject to the interpretation of which ever group (US or UK, Authority or FFI) happens to be reading it. My opinion: those groups have different interpretations. This is not yet a coherent guidance IMHO.

I mean exempt products such as a retirement fund. My take on the reduced reporting requirements would be that some products an FFI would market could be an ISA, (exempt) and a bank account with $51k (not exempt).

Although Birmingham Midshires is owned by Lloyd's banking group, is it the group, or the individual building society business structure that counts here? I know that the LloydsTSB at high street level will have nothing to do with none U.K residents, rather directing you to their International banking division. If LloydsTSB for example conduct their business within the U.K only,(don't think they solicit IOM and Channel Island residents), then would it make any difference that Lloyd's International have a branch in Hong Kong, Miami or elsewhere?