Mutual Legal Assistance (Tax Matters) (No. 2) Order, 2015

Summary

This Order implements the UK BVI Agreement to Improve International Tax Compliance (the UK FATCA style agreement) under the Mutual Legal Assistance (Tax Matters) Act, 2003. It sets out the due diligence, identification and reporting obligations that Financial Institutions in the British Virgin Islands must follow in respect of United Kingdom reportable accounts, and gives the Competent Authority powers to inspect records and enforce compliance.

• Due diligence and identification: Financial Institutions must establish and maintain arrangements to identify UK reportable accounts and determine account holders residence for tax purposes, applying the due diligence requirements in Annex I of the Agreement (or, as an alternative, relevant US Treasury Regulations procedures).
• Record keeping: Evidence and records of due diligence steps, and all books, documents and electronic records relating to reported information, must be retained for six years.
• Annual reporting: Reporting Financial Institutions must prepare and submit required account information annually to the Competent Authority, including a GIIN or local reference, subject to specified deadlines.
• Registration: Financial Institutions with reporting obligations must register with the Competent Authority no later than 1 April of the first calendar year they must report, and must notify the Competent Authority immediately of changes to registration details, including the primary contact.
• Annex III elections: A Financial Institution may elect to use the alternative reporting regime under Annex III for applicable UK reportable accounts, by making an election to the Competent Authority in the required form and timeline.
• Third party agents: Institutions may appoint agents to carry out reporting duties but remain responsible for the agent's compliance and must retain access to records.
• Inspection and compliance: The Competent Authority may require production or inspection of records, including information held outside the BVI, which must be brought into the BVI within a specified time.
• Penalties: Breach of obligations created under the Order attracts the general penalty under section 21 of the principal Act.

The Order applies retrospectively from the 2014 reporting year, with phased reporting deadlines for early years and an ongoing annual cycle thereafter.

Key obligations

• Financial Institutions must establish and maintain arrangements to identify UK reportable accounts and account holders' tax residence, applying Annex I due diligence requirements.
• Financial Institutions must keep evidence and records of due diligence steps for six years from the end of the year the arrangements applied.
• Reporting Financial Institutions must prepare required account information for 2014 and each following calendar year and submit it to the Competent Authority by the applicable deadline (31 May 2016 for 2014 and 2015; 31 May 2017 for 2016; 31 May of the following year thereafter).
• Reporting Financial Institutions must provide their GIIN where available, or a local reference in the form determined by the Authority, where no GIIN exists.
• For new accounts opened on or after 1 July 2014, UK national insurance numbers must be obtained and reported.
• Financial Institutions with reporting obligations must register with the Competent Authority no later than 1 April of the first calendar year they must comply, and submit information no later than 31 May of the reporting year.
• Financial Institutions must notify the Competent Authority immediately of any changes to registration information, particularly changes to the primary point of contact.
• Institutions electing to use the Annex III alternative reporting regime must make that election to the Competent Authority in the required form and timeline.
• Financial Institutions appointing third party agents remain responsible for the agent's compliance and must retain access to and be able to produce relevant records on request.
• Reporting Financial Institutions must retain all books, documents and records relating to reported information for six years.
• Financial Institutions must, on request, provide or make available information (including records located outside the BVI, which must be brought into the BVI) within the time specified by the Competent Authority.

Applies to

Financial Institutions

Deadlines

• 31st May, 2016: Deadline to submit required reporting information for reporting years 2014 and 2015.
• 31st May, 2017: Deadline to submit required reporting information for reporting year 2016.
• 31st May of the year following the calendar year to which the information relates: Ongoing annual deadline for submitting required reporting information for all subsequent years.
• 1st April in the first calendar year in which reporting obligations apply: Deadline for a Financial Institution to register with the Competent Authority.
• 1st July, 2014: Accounts opened on or after this date are treated as new accounts requiring UK national insurance number collection and reporting.