UK trade bodies to step up FATCA lobbying

UK trade bodies will be lobbying the British and American authorities to clarify whether UK pension schemes will be exempt from the Foreign Account Tax Compliance Act.

FATCA is designed to crackdown on the use of offshore accounts by American citizens to avoid paying their tax bill by forcing ‘foreign financial institutions’ to report Americans on their books.

The US government published draft FATCA regulations earlier this month that eased the compliance by allowing some foreign governments, rather than financial institutions, to collect financial data on American citizens and relay it to US authorities.

But there is still uncertainty over whether the exemption granted to retirement funds in the draft regulations applies to UK pension schemes.

Investment Management Association head of tax Jorge Morley- Smith (pictured) told PP that the IMA would be lobbying both the US and UK authorities to tweak the language in the exemption.

He said: “There is a relaxation that’s intended to broaden the categories within the exemption but it still doesn’t apply to UK schemes. Through the process of lobbying we would hope that amendments could be made to include UK pension funds in that.”

National Association of Pension Funds policy adviser Julian Le Fanu said there needed to be more clarity on the wording of the exemption and on information schemes will have to provide.

He said: “Our view is that the intention is that bona fide schemes are not subject to excessive burdens. We will certainly be lobbying in some form or another on the wording of the regulations.”

A Treasury spokeswoman said: “On a first reading it does suggest that pension funds are excluded but there’s nothing definitive we can say yet.”

She said the Treasury would be in talks with the US Internal Revenue Service to discuss the position for pension funds.