CDOT – Is the UK Version of FATCA, FATCA on Steroids?

CDOT (informally UK FATCA)

Although the UK’s HMRC estimates that there are 75,000 FFI for FATCA purposes for the UK alone, only 6,264 registered in time for inclusion onto the June 2nd 2014 US IRS list. This does not necessarily mean that the HMRC got their estimate wrong, nor does this necessarily mean that the UK is shooting for the self imposed deadline of 25th October 2014 either.

In the UK we need GIINs by January 1, 2015. The question is how late can an FFI leave it to register without compromising the January 1 2015 deadline?

Also given that there are clearly some mistakes in registration which include registrations from North Korea, recognizing Palestine as a State (unless, that is, there has been a development in US Foreign Policy) 23 FFIs registered in a Country called “Other” and 54 instances of an FFI claiming to belong to one jurisdiction but having a GIIN that suggests it belongs to another, why would a UK FFI be in a rush to register?

Why not learn from the mistakes of others? Especially so, given the correction process may be onerous.

We, in the UK, are under a Model 1 IGA and hence RDCFFIs (even without a GIIN) until January 1, 2015 (at which point a GIIN will be necessary to avoid withholding).

Also, let us not forget that the UK has its own version of FATCA (CDOT) that is in place for the UK and the 10 Crown Dependencies and Overseas Territories.

CDOT did not incorporate the amendments made to US FATCA in Notice 2014-33 i.e. CDOT has no transition period whatsoever, nor does CDOT delaying onboarding for entities in any way.

For CDOT, Notice 2014-33 does not apply. Despite the fact the UK is in good company in having an IGA that includes “Most favored nation status” the UK has officially announced that it is not is it implementing any transition period, nor any delay on FATCA CDD for entities.

So in the UK we are rather busily implementing FATCA and CDOT without the benefit of a transition and without any delay to the FATCA CDD related to onboarding.

The UK does not see registration on the IRS FATCA Portal as the most urgent priority for FATCA but absolutely does recognize the need to register on the IRS FATCA Portal in time to evidence a GIIN by January 1, 2015.

It is also worth pointing out that of the 77,353 entities on the June 1st 2014 list, 37% are from the UK and her Crown Dependencies and Overseas Territories, most notably the Cayman Islands.

One wonders if, were if not for CDOT, the 77,353 might not be considerably smaller.

It is not that the UK is late or not taking FATCA seriously. It is not that HMRC got its estimate horribly wrong.

I would argue that what we are seeing is that the UK is the flagship of FATCA compliance and that we Brits are taking FATCA very seriously indeed.

8 thoughts on “CDOT – Is the UK Version of FATCA, FATCA on Steroids?

    • We Brits find the US coverage of FATCA baffling as London is second only to NYC in Financial Services. In many cases, it is first. Does the US believe that CDOT not having followed N2014-33 will have precisely zero impact?

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