Survey: the first CRS transmittals take place in 22 days time
In a matter of days, financial institutions in the UK will make their first Common Reporting Standard (CRS) transmittal to HMRC. It promises to be a significant event and we’re keen to hear from the industry how its preparations are going and what its predictions are.
So we’ve teamed up with compliance solution provider Sovos to carry out a brief survey. If you have time, click here and fill it out. We’ll be publishing the findings at a later date.
The UK is amongst 40 “early adopter” countries for the CRS and HMRC has set 31 May 2017 as its deadline. A further 28 tax jurisdictions have set deadlines in May and June so it promises to be a busy summer for many bank staff.
The CRS is part of the OECD’s new automatic information of exchange (AEOI) regime designed to facilitate greater global tax transparency and it calls for all qualifying financial institutions to upload considerable volumes of information about their account holders to portals at applicable jurisdictions. Since CRS reporting is new this year, these portals have not been used for CRS transmittals before and there is considerable debate about how successful the first transmittals will be.
(Sovos is cautioning its clients to build in extra time in their AEOI reporting process to account for added transmittal time.)
The company is predicting that the majority of transmittals submitted in the next two months may be rejected and returned for correction and resubmission. Using as a baseline a survey it carried out last year into FATCA filings made by financial institutions in the US year, (where it found that only 44% were accurate) it now predicts that this first CRS filing will attract an even lower figure; 40% or only four in every ten transmittals.
The company points to five factors which it believes supports its prediction. These included the volume of data to be submitted; the inconsistency found across jurisdictions and the perceived lack of support received from jurisdictions; the degree of subjectivity found in the OECD Schema and the level of technical expertise made available to compliance departments.
Further, the company thinks that some institutions may require several rounds of resubmissions before the respective authorities accept their data, thereby putting their compliance departments under considerable strain. Commenting on that strain, Scott Freedman, the company’s director of product strategy, says: “We are particularly concerned that the first major CRS filing deadlines in May and June will be challenging.”
Are you more optimistic than Sovos or share their concern that this first year will be “challenging”? We’re keen to hear your views. You can provide them by participating in the survey. Click here to take part!