10.02 – Significant Non-Compliance

Significant non-compliance may be determined from either an IRS or HMRC perspective. In either event, the relevant Competent Authorities will notify the other regarding the circumstances.

Where one Competent Authority notifies the other of significant non-compliance, there is an 18 month period in which the Financial Institution must resolve the non-compliance.

Where HMRC is notified of or identifies significant non-compliance by a UK Financial Institution, HMRC will apply any relevant penalties under the legislation.

HMRC will also engage with the Financial Institution to:

  • discuss the areas of non-compliance;
  • discuss remedies/solution to prevent future non-compliance;
  • agree to measures and a timetable to resolve its significant non-compliance.

HMRC will inform the IRS of the outcome of these discussions.

In the event that the issues remain unresolved after a period of 18 months then the Financial Institution will be treated as a Non-Participating Financial Institution.

The following are examples of what would be regarded as significant non-compliance include:

  • Repeated failure to file a return or repeated late filing.
  • Ongoing or repeated failure to register, supply accurate information or establish appropriate governance or due diligence processes.
  • The intentional provision of substantially incorrect information.
  • The deliberate or negligent omission of required information.