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MEET THE TEAMA charity has been sent a substantial amount of paperwork by their bank, HSBC, which includes an 11 page return and a copy of US IRS form W-8BEN-E. This all apparently relates to the Foreign Account Tax Compliance Act (“FATCA”) and in effect requires all organisations trading on the UK to provide voluminous evidence to prove that they are not involved in money laundering. The charity understands that this is a US-inspired piece of legislation which the UK government has agreed to adopt. Whilst the underlying objective may be totally laudable, the process for SMEs and similar is potentially horrifying. A larger organisation will no doubt be able to divert resources to deal with the mountain of research and paperwork required but that does not work for a very small charity.
Even the thought of taking professional advice would stretch the limited resources of such a charity quite considerably. Unfortunately HSBC have not, in the opinion of the charity, been particularly helpful and have asserted that they “cannot give any advice”. They also say that all other banks and similar institutions are having to do the same thing although this is the first time the charity has heard of it, and they do have contacts with other major banks in a number of different capacities.
The question to other charities are:
If you have any information on this, then please reply so that this can be passed on to the charity and other members of the Charity Forum Connect.
This response from a Panel Member (accountancy firm) – Yes, we can help as we have a FATCA team in London to help us (Wealth Managers) deal with the issues, which are not straight forward. I am not sure about the exemptions for charities but will ask the question? I would be happy to meet the charity and provide assistance where I can.
This response from a Panel Member (accountancy firm) – We are seeing a lot of these forms later, particularly from HSBC. I’ve not had experience of Charities being subject to them only businesses. Unfortunately it needs to be completed. If not completed a business in the US paying a non US entity is likely to deduct 30{ba3215b0bf35eaeb06be458b3396ffbfc50bb9db10c9ff1594dfc3875e90ea48} withholding tax, which is unlikely to be repaid. My understanding is that charities are not exempt. However they should be able choose the non-profit making entity which means you cannot ignore the rest of the form. I will send you the CFG commentary on the subject.
I returned this paperwork to HSBC on 28/09/15. I only filled in the FATCA paperwork ensuring that it was clear there were no US dealing/transaction.
Unfortunately, the forms are typical of the level of influence that business activities and the SEC in the US has over the UK and I have experienced this in the past with other things. The forms are daunting and do require some time to work through and gather the data required.
Please note any attachments mentioned above have been attached to an email sent to all Forum Members.