Inland Revenue Launches Information Exchange Consultation

by Jason Gorringe, Tax-News.com, London

01 July 2003

The Inland Revenue has begun a consultation exercise on the implementation of the European Savings Tax Directive which will require UK banking institutions to exchange savings information with other member states.

The revenue has published a series of discussion papers on the issue on its website and is inviting comments and suggestions in response to the papers from members of the financial community up to August 22 this year.

In a recent statement on the decision to exchange information (as opposed to imposing a witholding tax on EU resident's savings), the IR stated:

"The Government believes that exchange of information between tax authorities is the best way to ensure that individuals pay the right amount of tax on cross-border income from savings. The Government therefore supports the European Directive on the Taxation of Savings, which is based on such an exchange of information."

It continues:

"To enable the UK to implement the Directive, and to help further the general aim of increasing the effective exchange of information, the Inland Revenue intends to introduce a scheme to collect information automatically about the payment of savings income to certain overseas residents, and to exchange this with certain other countries."

The statement also outlined those most affected by the EU ruling:

"The scheme will mainly affect banks, registrars, custodians and other financial institutions that make interest payments to individuals in prescribed territories. But it may also affect market operators who purchase debt-claims from individuals in prescribed territories or redeem debt-claims held by individuals in prescribed territories. It will also be relevant to those who hold or administer debt-claims on behalf of others and those who advise paying agents (such as accountants, tax advisers or solicitors)."

A comprehensive report on the OECD, FATF and other 'offshore' initiatives, including the EU's Savings Tax Directive, is available in the Tax News Reports Shop at http://www.tax-news.com/reportshop