Global Forum on Transparency and Exchange of Information for Tax Purposes : Combined.

123 Pages·2014·1.745 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, COMBINED: PHASE 1 + PHASE 2,
incorporating Phase 2 ratings – UNITED KINGDOM
Peer Review Report
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by 120 jurisdictions, which participate in the Global Forum on an Combined: Phase 1 + Phase 2,
equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation P incorporating Phase 2 ratings
e
of the international standards of transparency and exchange of information for tax purposes. er R
These standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange e
v
of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model iew
Tax Convention on Income and on Capital and its commentary as updated in 2004. The Re UNITED KINGDOM
standards have also been incorporated into the UN Model Tax Convention. po
r
The standards provide for international exchange on request of foreseeably relevant t C
o
information for the administration or enforcement of the domestic tax laws of a requesting m
b
party. Fishing expeditions are not authorised but all foreseeably relevant information must be in
e
provided, including bank information and information held by fi duciaries, regardless of the d P
existence of a domestic tax interest or the application of a dual criminality standard. ha
s
e
All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum 1
as relevant to its work, are being reviewed. This process is undertaken in two phases. + P
Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for ha
s
the exchange of information, while Phase 2 reviews look at the practical implementation of e 2
that framework. Some Global Forum members are undergoing combined – Phase 1 and , in
Phase 2 – reviews. The Global Forum has also put in place a process for supplementary co
reports to follow-up on recommendations, as well as for the ongoing monitoring of rpo
jurisdictions following the conclusion of a review. The ultimate goal is to help jurisdictions ra
to effectively implement the international standards of transparency and exchange of ting
information for tax purposes. Ph
a
s
All review reports are published once approved by the Global Forum and they thus represent e 2
agreed Global Forum reports. ra
For more information on the work of the Global Forum on Transparency and Exchange of ting
s
Information for Tax Purposes, and for copies of the published review reports, please refer to U
www.oecd.org/tax/transparency and www.eoi-tax.org. N
IT
E
D
Consult this publication on line at http://dx.doi.org/10.1787/9789264205987-en. K
IN
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and D
statistical databases. O
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Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-20597-0
9HSTCQE*cafjha+
23 2013 68 1 P

Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
United Kingdom 2013
COMBINED: PHASE 1 + PHASE 2,
INCORPORATING PHASE 2 RATINGS
November 2013
(reflecting the legal and regulatory framework
as at January 2013)
ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD.
Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect
theofficialviewsoftheOECDorofthegovernmentsofitsmembercountriesor
thoseoftheGlobalForumonTransparencyandExchangeofInformationforTax
Purposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof
orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand
boundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2013),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:UnitedKingdom2013:Combined:Phase1+Phase2,incorporatingPhase2ratings,OECD
Publishing.
http://dx.doi.org/10.1787/9789264205987-en
ISBN978-92-64-20597-0(print)
ISBN978-92-64-20598-7(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(online)
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TABLE OF CONTENTS – 3
Table of Contents
About the Global Forum                                             5
Executive Summary                                                 7
Introduction                                                       11
Information and methodology used for the peer review of the United Kingdom 11
Overview of the United Kingdom                                     13
Recent developments                                               19
Compliance with the Standards                                       21
A. Availability of Information                                        21
Overview                                                        21
A1 Ownership and identity information                               23
A2 Accounting records                                            48
A3 Banking information                                           56
B. Access to Information                                            59
Overview                                                        59
B1 Competent Authority’s ability to obtain and provide information        61
B2 Notification requirements and rights and safeguards                  72
C. Exchanging Information                                          75
Overview                                                        75
C1 Exchange-of-information mechanisms                             77
C2 Exchange-of-information mechanisms with all relevant partners        88
C3 Confidentiality                                                89
C4 Rights and safeguards of taxpayers and third parties                  91
C5 Timeliness of responses to requests for information                   93
PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – UNITED KINGDOM © OECD 2013
4 – TABLE OF CONTENTS
Summary of Determinations and Factors Underlying Recommendations    99
Annex 1: Jurisdiction’s Response to the Report                        103
Annex 2: List of Exchange of Information Mechanisms in Force          104
Annex 3: List of All Laws, Regulations and Other Relevant Material      113
Annex 4: People Interviewed During On-site Visit                      117
PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – UNITED KINGDOM © OECD 2013
ABOUT THE GLOBAL FORUM – 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for Tax
Purposes is the multilateral framework within which work in the area of tax
transparency and exchange of information is carried out by over 120 jurisdic-
tions, which participate in the Global Forum on an equal footing
The Global Forum is charged with in-depth monitoring and peer review of
the implementation of the international standards of transparency and exchange
of information for tax purposes These standards are primarily reflected in the
2002 OECD Model Agreement on Exchange of Information on Tax Matters
and its commentary, and in Article 26 of the OECD Model Tax Convention on
Income and on Capital and its commentary as updated in 2004 The standards
have also been incorporated into the UN Model Tax Convention
The standards provide for international exchange on request of foreseeably
relevant information for the administration or enforcement of the domestic tax
laws of a requesting party Fishing expeditions are not authorised but all fore-
seeably relevant information must be provided, including bank information
and information held by fiduciaries, regardless of the existence of a domestic
tax interest
All members of the Global Forum, as well as jurisdictions identified by the
Global Forum as relevant to its work, are being reviewed This process is under-
taken in two phases Phase 1 reviews assess the quality of a jurisdiction’s legal
and regulatory framework for the exchange of information, while Phase 2 reviews
look at the practical implementation of that framework Some Global Forum
members are undergoing combined – Phase 1 and Phase 2 – reviews The Global
Forum has also put in place a process for supplementary reports to follow-up on
recommendations, as well as for the ongoing monitoring of jurisdictions following
the conclusion of a review The ultimate goal is to help jurisdictions to effectively
implement the international standards of transparency and exchange of informa-
tion for tax purposes
All review reports are published once adopted by the Global Forum
For more information on the work of the Global Forum on Transparency and
Exchange of Information for Tax Purposes, and for copies of the published review
reports, please refer to wwwoecdorg/tax/transparency and wwweoi-taxorg
PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – UNITED KINGDOM © OECD 2013

ExECUTIVE SUMMARy – 7
Executive Summary
1 The combined report of 2011 (“the 2011 report”) summarised the
legal and regulatory framework for transparency and exchange of informa-
tion in the United Kingdom (UK) as well as practical implementation of that
framework The international standard which is set out in the Global Forum’s
Terms of Reference to Monitor and Review Progress Towards Transparency
and Exchange of Information, is concerned with the availability of relevant
information within a jurisdiction, the competent authority’s ability to gain
timely access to that information, and in turn, whether that information can
be effectively exchanged with its exchange of information partners
2 As a major world economy and with one of the leading financial
centres in the world (City of London), the UK has a long history in negotiat-
ing double taxation conventions (DTCs) leading to a network of agreements
covering 122 jurisdictions Further, it has negotiated taxation information
exchange agreements with 22 jurisdictions, 8 of which are also covered
by a DTC This leads to a network of exchange of information agreements
with 136 jurisdictions which includes all of the UK’s main economic and
diplomatic partners as well as financial centres The large majority of
these agreements allow the UK to exchange information to the standard
Nevertheless, the UK should continue its programme of updating the last
of its older agreements The UK is also able to exchange information under
some multilateral mechanisms
3 The UK legal environment ensures in most circumstances that the
necessary ownership information is maintained for all relevant companies,
partnerships, trusts and other entities and arrangements This is in par-
ticular thanks to the registration requirements for companies and limited
partnerships, anti-money laundering legislation requiring a range of service
providers to conduct customer due diligence, and requirements to report
information to HM Revenue and Customs for tax purposes Nevertheless,
further action should be taken to either ensure that robust mechanisms are
in place to identify the owners of bearer shares or amend its legislation to
eliminate such shares The UK has recently reported that it is continuing to
evaluate which measures are necessary and has not identified any changes to
relevant legislation
PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – UNITED KINGDOM © OECD 2013
8 – ExECUTIVE SUMMARy
4 The UK legislation also contains provisions requiring accounting
information and underlying documentation to be kept for a minimum of
five years for all relevant entities and arrangements Further, UK legislation
ensures that bank information is available for all account-holders
5 The 2011 assessment of the UK showed that it was able to access
information for international exchange of information purposes where the
taxpayer’s name was known, but identified a shortcoming where the tax-
payer’s name was not known By virtue of amendments made to its legal and
regulatory framework through the Finance Act, 2012, the United Kingdom
now has the power to obtain the taxpayer’s name where the requesting party
has provided sufficient information to identify the taxpayer Once the name
of the taxpayer is known, the UK’s established access powers will apply
Consequently, both elements B1 and C1 are now assessed to be “in place”
and the Phase 1 recommendations previously made under B1 as well as the
first recommendation made under C1 are removed The UK has reported
that since 2007, there were only two or three instances where they had to
approach the Tribunal after the requesting jurisdiction had not provided the
name and address of the taxpayer The United Kingdom should nevertheless
ensure that this new procedure does not create additional delays in providing
requested information to those already stressed in the 2011 assessment
6 With its involvement in developing a very comprehensive network of
tax agreements, and its key position in international trade, the UK is a very
active country in the field of exchange of information in tax matters, receiv-
ing approximately 1 200 (1 500 for 2010) requests a year This volume of
requests and the will of the UK authorities to provide comprehensive answers
to their partners show the deep involvement of the UK in exchanging infor-
mation for tax purposes However, several peers expressed their concerns
that it takes too much time to receive information in cases where a formal
information notice has to be issued and approved by a Tribunal, in particular
in cases regarding bank information The UK has recently indicated that
some steps that have been taken to review the process for issuance of a formal
notice to obtain information with a view to ensuring that it is compatible with
effective exchange of information in tax matters in this regard However,
while improvements to its EOI systems have been noted it has not been
possible to verify their effectiveness as yet and peers have not yet reported
improvements in response times, (See comments in C5)
7 Most international exchange of information for direct tax purposes is
dealt with by an EOI Team in the Centre for Exchange of Intelligence (CEI)
within HMRC’s Risk and Intelligence Service in London The EOI team is
sufficiently resourced to ensure its mission is being exercised in a good way,
even considering the very large number of EOI matters it manages Due to
extensive information holdings, including access to many registers, about
PEER REVIEW REPORT – COMBINED PHASE 1 AND PHASE 2 REPORT – UNITED KINGDOM © OECD 2013