06.03 – Identification of the account holder as a CD or Gibraltar resident

Where a Financial Institution finds an indicia that an account holder is a tax resident of a CD or Gibraltar, the account needs to be reported.

Identification of the account holder as tax resident in a CD or Gibraltar is only applicable where the Financial Institution has positive and current evidence of tax residence, i.e. the Financial Institution must have recorded and retained the tax residence status of the account holder.

Examples of positive evidence:

  • the Financial Institution has previously asked the account holder for their tax residence, has maintained a record of this and has no reason to believe that there has been any change in tax residence.
  • the Financial Institution submits tax returns to a CD or to Gibraltar on behalf of the account holder

The Financial Institution does not have an obligation to infer or otherwise determine the tax residence of the account holder from other types of knowledge or documentation that they hold.

For Lower Value Accounts, i.e. those under $1,000,000, the search for an account holder’s tax residence only needs to be undertaken where the Financial Institution can electronically search its data system for the tax residence of account holders.

There is no ‘repair’ for this indicia, as identification of an account holder as being tax resident in a CD or Gibraltar means that the account will be reportable. However, the identification of an account holder as being tax resident in a CD or Gibraltar must be correct, and for it to be correct, it must be their current tax residence.

If the account holder provides the Financial Institution with evidence that the tax residence that the Financial Institution holds is not their current tax residence, then the account holder shall NOT have been identified as tax resident in a CD or Gibraltar.

Such evidence may include the following:

  • information showing that they are no longer tax resident in a CD or Gibraltar
  • information that their tax residence as held by the Financial Institution was incorrect.

The Financial Institution only has to review the tax residence of the account holder where this information is held. There is no requirement for the Financial Institution to undertake an annual verification of the tax residency of the account holder.

However, there are due diligence requirements to obtain updated self-certifications where a change of circumstance indicates to the Financial Institution that the self-certification they hold for the account holder can no longer be relied upon (See section 4.18 of the US guidance). If tax residence is contained in such an updated self-certification, this should be taken as the current tax residence – subject to the usual considerations of reasonableness.

Financial Institution with a Local Client Base

If the Financial Institution holds data that identifies the Account Holder as being tax resident in a CD or Gibraltar (or any other jurisdiction), then this would mean that the account would be provided to a person who is NOT “a resident of the UK”.

Accounts that are provided to account holders that are NOT resident in the UK are already subject to due diligence by a Financial Institution with a Local Client Base under the regulations to implement the US agreement (see section 2.13 of the US Guidance).