07.01 – Threshold Exemptions that apply to Pre-existing Entity Accounts

The UK legislation allows for Financial Institutions to elect whether to apply the threshold exemptions when reviewing and identifying Pre-existing Entity Accounts. The Agreement is written to provide for exemptions to apply to certain accounts based on thresholds subject to an election to remove them. The UK legislation reverses this requirement meaning that no thresholds apply unless a Financial Institution elects to apply the appropriate threshold exemptions set out in the Agreement when reviewing and identifying Pre-existing Entity Accounts.

The election can apply to all Financial Accounts or to a clearly identifiable group of accounts, such as accounts held by a line of business.

  • Where the threshold exemption is applied, and the account balance or value does not exceed $250,000 at 30 June 2014 there is no requirement to review, identify or report the account until the account balance exceeds $1,000,000, at 31 December 2015 or 31 December of any subsequent calendar year.

If a Financial Institution does not make an election under the Regulations to apply the threshold exemption, it will need to review and identify all Pre-existing Entity Accounts.

The form the election will take and rules governing such elections are yet to be decided, and HMRC will consult with business on the most suitable approach.