HMRC has published regulations and guidance in relation to the implementation of the Foreign Account Tax Compliance Act (FATCA).

By way of reminder, FATCA aims to combat tax evasion by US tax residents using foreign accounts. It includes certain provisions on withholding taxes and requires financial institutions outside the US to pass information about their US customers to the US tax authorities, the Internal Revenue Services (IRS). Failure to meet these new reporting obligations would result in a 30% withholding tax on the financial institutions.

The FATCA provisions impose new and substantial burdens on UK businesses in identifying US taxpayers, and registering and reporting information to the IRS. Significantly for UK institutions the Data Protection Act precludes UK businesses from passing the required information to the US.

The UK Government (along with France, Germany, Italy, and Spain) and with the support of the European Commission took part in joint discussions with the US Government to explore an intergovernmental approach to FATCA, supporting the overall aim to combat tax evasion, while reducing risks and burdens on financial institutions. A model intergovernmental agreement (IGA) was developed and published in July 2012.

Subsequently, the UK and the US signed an IGA in September 2012. The IGA reduces some of the administrative burden of complying with the US regulations, and provides a mechanism for UK financial institutions to comply with their obligations without breaching the data protection laws. Under the IGA, financial institutions pass information to HMRC who will then automatically exchange this information with the IRS.

In Ireland, the legislation to implement the IGA with the United States was contained in Finance Act 2013.