Q&As

Are HMRC statutory tax-advantaged share schemes caught within FACTA?

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Published on LexisPSL on 24/01/2020

The following Share Incentives Q&A provides comprehensive and up to date legal information covering:

  • Are HMRC statutory tax-advantaged share schemes caught within FACTA?

The Fair and Accurate Credit Transactions Act (FATCA) is so called because it derives from the Foreign Account Tax Compliance provisions contained in the United States Hiring Incentives to Restore Employment (HIRE) Act 2010.

The main FATCA provisions are now contained in Chapter 4 of Subtitle A of the US Internal Revenue Code (the Code).

The aim of FATCA is, broadly, to deter and reduce tax evasion by US taxpayers using foreign (ie non-US) accounts to hide income and assets from the Internal Revenue Service (IRS).

Under FATCA, financial institutions (FI)s must register with the IRS. Where a FI maintains a financial account, it must carry out certain due diligence on the account holder and (if it falls within the scope of the UK:US IGA) file a report with HMRC. Where a FI does not maintain any financial accounts and is within the scope of the UK:US IGA, it must make a nil return to HMRC.

FACTA can arise in employee share scheme arrangements, usually on exercise of the options, or, in the case

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