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How Brewin Dolphin is preparing for Fatca
by Sarah Miloudi on Aug 20, 2012 at 07:56
The US Foreign Account Tax Compliance Act (Fatca) regulation has been dubbed more significant than the UK’s retail distribution review (RDR), which wealth managers have been preparing for since 2006.
Although discretionaries and fund managers alike are still getting to grips with the impending changes, many expect Fatca’s introduction in 2014 to usher in a new era that obliges UK fund groups and distributors to identify their US investors and report the details to the US Internal Revenue Service.
Now, Brewin Dolphin is reacting to the rules change by assessing the potential impact on its business.
Jamie Matheson, executive chairman of the private client stockbroker, said it has established an ‘approved and resourced project’ on Fatca as it awaits clarity following the intergovernmental agreement (IGA) announced at the end of July.
This saw policy-makers in the UK, France, Italy, Germany and Spain all commit to improving tax compliance and implement the rules set out under the US-driven legislation.
According to the latest agreement, which builds on a previous joint statement issued in February, a framework has been set out that mitigates many of the fears that fund managers had about Fatca, namely having to impose a 30% penalty for non-disclosure.
The IGA dealt with the legal barriers to compliance, due diligence and underlined the fact that UK financial institutions will not be required to withhold tax on payments they make, nor will withholding tax will be imposed on income received by UK financial institutions.
Speaking to Wealth Manager, Matheson said that Brewins felt ‘reassured’ by the latest guidance, because even though the firm still needs some clarity, it brought Fatca’s due diligence requirements into line with the anti-money laundering regime with which it already complies.
‘This should have a favourable bearing on the costs,’ he explained, although he pointed out Brewins is still assessing the impact of Fatca.
‘We have an approved and resourced project currently running for Fatca, based on the published requirements and timelines,’ he said. ‘Now the UK IGA is released, we can complete our assessment of the one-off and on-going costs of compliance, though we are still awaiting information from other jurisdictions which do not currently feature under the IGA model, particularly the Channel Islands.’
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