The above brief deals with reporting of interest payments and provides further information about European Union Savings Directive (EUSD) returns. The brief advises that Financial Institutions check that their procedures are correctly separating interest payments made to customers with addresses in the UK, and fully reportable countries, from those with addresses in the EU, and other prescribed territories.

HMRC issued an earlier brief on this subject last November at which time an initial investigation only had been completed. The final investigation is now completed which has shown that some financial institutions making returns of interest payments are not separating their customers by address onto the correct return.

All paying agents must take reasonable care when making EUSD returns to HMRC to ensure those returns are accurate. The Regulations provide for penalties for financial institutions that send inaccurate returns. These penalties apply equally to deliberately incorrect returns or because the institution has not taken enough care to make sure the return is correct.

The provisions have now been in place for a number of years and the expectation of HMRC is that all institutions should by now have in place appropriate systems to ensure that:

• complete and accurate returns are made
• returns are checked for credibility before they are submitted

This includes ensuring that all appropriate data is entered in each relevant field. If an institution is found to be continuing to submit returns that include incorrect information or are otherwise incomplete or inaccurate then they can expect that the penalty regime will be invoked. On a final note, the brief advises that “Institutions should consider themselves on notice that HMRC will be looking more critically at EUSD returns in future”.