Practice area: Regulatory and information exchange

Andrew Neave

  • 21 September 2024
Andrew Neave

An expert in company law (in particular company governance (encompassing the rules across the full lifecycle of a company), directors’ duties and transactions relating to company shares), Andrew works closely with practice groups and their clients across Forsters.

Experienced also in family investment companies, estate management and freehold companies, Andrew’s depth and breath of knowledge is frequently called upon by our Private Wealth, Residential Property and Enfranchisement teams as much as it is our Corporate and Commercial (including Employment and Partnerships) teams.

Regulatory and information exchange

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The UK regulatory framework, and the global reporting requirements, in relation to trusts and other wealth-holding structures is becoming increasingly complex and onerous.

Our Private Wealth Regulatory team advises trustees, other fiduciary service providers, companies and individuals on their reporting obligations under the UK’s ever increasing regulatory framework, and the global reporting issues that they also need to consider, in relation to the trusts and other wealth holding structures they create and manage.

This area is becoming increasingly complex and the penalties for non-compliance, both financial and reputational, are significant.

Relevant rules and regulations include (but are not limited to):

  • Economic Crime Act: Unexplained Wealth Orders
  • EU and OECD mandatory disclosure rules
  • The provisions of 5AMLD as they apply to certain industries (e.g. the art industry, cryptocurrency etc.)
The Common Reporting Standard (CRS)

The OECD introduced the Common Reporting Standard (“CRS”) to help combat tax evasion by individuals using accounts and structures in jurisdictions other than in the jurisdiction in which they are resident i.e. a FATCA for the rest of the world, which draws heavily on the approach taken to implementing FATCA (see our separate FATCA summary here). The CRS is multilateral in nature compared to FATCA and some US specific features of FATCA (such as a definition of “US Person”) are not relevant to the CRS. Within the CRS framework, FIs must report information for exchange between tax authorities in the signatory jurisdictions.

Who does it apply to?

The CRS applies in jurisdictions that have signed up to the CRS. Financial Institutions (“FIs”) in so-called CRS Participating Jurisdictions are subject to active obligations to comply with the requirements of the CRS.

What are the key requirements/ dates/ penalties?

Like FATCA, the CRS introduced a standard set of due diligence procedures pursuant to which FIs must identify Account Holders and Controlling Persons who are Account Holders of Financial Accounts which they maintain. Account Holders are reportable under CRS if they are resident in a CRS Participating Jurisdiction other than the CRS Participating Jurisdiction in which the Financial Institution is resident. The CRS is not backed by sanctions in the same way as FATCA, and CRS Participating Jurisdictions are responsible for enforcing CRS compliance at a domestic level.

The Foreign Account Tax Compliance Act (“FATCA”) is part of the US Hiring Incentives to Restore Employment Act which was enacted in 2010. The main objective of FATCA is to combat tax evasion by US Persons using non-US accounts and structures. It works by requiring non-US Financial Institutions (“FIs”) to report directly (or indirectly via their own tax authorities) to the US Internal Revenue Service (“IRS”) any (non-US) assets held by their US Account Holders, with significant sanctions (see below) for non-compliance.

Who does it apply to?

Everyone – FATCA works on the premise that every person could potentially be a US Person and therefore unless positive steps are taken to prove that someone is not a US Person, they will be treated as a US Person for FATCA purposes.

What are the key requirements/ dates/ penalties?

All FIs must register (or be registered) on the FATCA Portal and obtain a GIIN as evidence of compliance (or, where permitted by FATCA, ensure they are covered by the GIIN of another FI). FIs must identify the Account Holders of the Financial Accounts they maintain and report information about Account Holders or Controlling Persons who are US Persons annually. There are complex definitions and specified due diligence procedures for identifying Account Holders depending on the type of FI concerned. Non-Financial Foreign Entities (“NFFEs”) with over 50% of their income being passive (as defined for FATCA purposes) must be reported upon by any FIs with which they interact (rather than reporting direct).

FATCA may apply directly via the US Regulations (in which case FIs report directly to the IRS) or it may apply via an Intergovernmental Agreement between the USA and another jurisdiction (in which FIs report to their own tax authority respectively), depending on the jurisdiction in which an FI is located. Sanctions for non-compliance include (but are not limited to):

  • a non-refundable FATCA withholding tax which certain paying agents are obligated to deduct at the rate of 30% on certain US income and gains arising to non-FATCA compliant accounts;
  • the threat of exclusion from the US currency and securities markets;
  • FIs that resist compliance (so-called recalcitrant accounts) must be closed and details reported to the IRS; and
  • reputational damage associated with FATCA non-compliance.

The Trust Registration Service (TRS) is HMRC’s register of the beneficial ownership of trusts.

Who does it apply to?

From 6 October 2020 the scope of trusts required to register was extended to nearly all express trusts, not just those with a UK tax liability. Now all UK express trusts and some non-UK express trusts need to register, subject to some specific exclusions.

What are the key requirements/dates/penalties?

Trusts with a UK tax liability had to register on TRS by 31 January (or 5 October in some cases) following the end of the tax year in which the trust had a liability to UK tax. Following the extension, non-taxable trusts are required to register on the TRS by 10 March 2022, however HMRC has stated that this deadline will be extended as the online portal does not allow these trusts to register yet. Penalties starting at £100 can be charged for failing to register on TRS or updating the register when there has been a change.

Read more about The Register of Overseas Entities and how it applies to trusts here.

The Register of Persons with Significant Control (PSC) is a free to access public register including personal details about the individuals who own or control companies.

Who does it apply to?

Officers from UK companies and LLPs are required to identify the individuals with significant control over their companies and confirm their information, record their details on the company register, provide this information to Companies House and update any details that change. A PSC is someone that holds more than 25% of shares or voting rights in a company, has the right to appoint or remove the majority of the board of directors or otherwise exercises significant influence or control over the company.

What are the key requirements/dates/penalties?

Failing to provide information on the PSC register or providing inaccurate information is a criminal offence and could result in a fine or a prison sentence of up to two years.

The team advise on all relevant issues, including the information that affected persons must collect, maintain and report, and the form that reporting should take. They also advise on how to proceed when there has been a complete or partial failure to report appropriately.

Please note that we do not advise financial services firms or institutions in relation to their own regulatory obligations as governed by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA).

Julia Ramsden Gunduz

  • 29 August 2024
Julia Ramsden Gunduz

Julia is Counsel in Forsters’ Private Client team, specialising in advising trustees and financial institutions, both from a contentious and non-contentious angle, on tax and trust related issues arising in connection with such structures. This includes advising on global regulatory and exchange of information initiatives, tax regularisation and disclosure facilities, as well as legislative changes in the UK.

She also has extensive experience of advising international high net worth individuals and their families on their estate and wealth planning strategies and family governance. This includes developing and implementing complex cross-border structures, taking into account international tax planning considerations, domicile, the conflict of laws, forced heirship and asset protection issues.

Julia has experience of working in-house at financial institutions and is able to factor commercial realities (and constraints) into her advice and the solutions she provides.

She provides internal training on regulatory and exchange of information topics as well as mentoring junior associates. She is a native German speaker.

Jo Thompson

  • 29 August 2024
Jo Thompson

Jo is a Senior Associate in the Private Client team where she advises a broad range of clients including high net worth individuals, families, landed estates and trustees.

She advises both UK domestic and international clients on a wide range of tax and estate planning matters. She frequently acts for families who have cross-border personal and business interests, providing them with trust structuring, succession planning and family governance advice.

Jo has specialist expertise in advising clients from the art world, including art collectors and living artists. She advises on all matters relating to owning art, including sales and purchases; establishing tax efficient ownership structures; and advice on collection management, which includes planning in relation to heritage property.

Described as “fantastic to work with”, Jo is named in both the Art and Cultural Property and the Personal Tax, Trusts and Probate rankings of the latest Legal 500.

Laura Neal

  • 29 August 2024
Laura Neal

Laura is a Senior Associate in the Private Client team. She plays a key role in running Forsters’ Art group which focusses on acting for galleries and auction houses, as well as UK-based and international estates, trusts, foundations and collectors. Laura is ranked as an ‘Associate to Watch’ in the Chambers HNW Guide for Art and Cultural Property.

Laura also volunteers at South Westminster Legal Advice Clinic.

James Brockhurst

  • 29 August 2024
James Brockhurst

James is ranked in Chambers High Net Worth and The Legal 500 and is recognised in Legal Week’s Global Elite: Private Client Global Excellence listing.

As a Partner in our Private Client team, James advises international clients – including high‑net‑worth individuals, family offices, entrepreneurs and trustees – on succession planning, tax, family governance and cryptoassets. Based in the United Arab Emirates, James leads our offering in the Abu Dhabi Global Market.

A trusted adviser to globally prominent families, James combines empathy with technical expertise and a strong commercial mindset. Whether working with family offices, entrepreneurs or senior executives, James approaches every matter with sensitivity, discretion and professionalism.

James has extensive experience in establishing trusts, foundations and corporate structures. He regularly conducts complex family governance exercises involving multiple generations and branches, with a focus on preventing disputes and fostering family harmony. He also advises on UAE structures (including ADGM and DIFC) and UAE wills.

An early pioneer in cryptoasset advisory, James is listed as a ‘Top Recommended’ adviser in Spear’s Cryptocurrency Index (2023–2025) and is the author of Cryptoassets for Private Clients. He advises some of the world’s wealthiest crypto investors and token issuers.

Carole Cook

  • 29 August 2024
Carole Cook

Carole advises UK and overseas individuals and families on tax, trust, estate and succession planning, and philanthropic matters. International in outlook, much of her work centres on cross‑border estate planning and coordinating matters for clients with assets in multiple jurisdictions.

Led by the client’s specific needs, Carole takes a proactive and strategic approach to individual matters.

Carole is ranked in the latest Chambers High Net Worth Guide and is recognised in Legal Week’s most recent Private Client Global Elite Directory. She has also received recommendations in The Legal 500.

Her clients include entrepreneurs, non‑UK‑domiciled and non‑UK‑resident individuals, family offices and the owners of landed estates. She also advises trustees, both in the UK and elsewhere, on tax matters and in relation to their duties.

Carole frequently works alongside and collaborates with colleagues in multiple teams, particularly Corporate Tax, Residential Property, Banking and Finance, and other private client specialists.