A supplementary report has been issued further to the combined Phase 1-2 report issued by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes in September 2011. Since that date the UK has sent a follow up report to the Peer Review Group on the legislative amendments and practices put in place to implement recommendations made in the original report at part B.1. concerning the competent authority’s ability to obtain and provide information and in part C.1.  on the network of exchange of information agreements) and part C.5.  on the timeliness of responses to exchange of information requests).

The UK has a wide network of double tax agreements and a growing network of agreement on the exchange of tax information, as well as being able to exchange information under some multilateral agreements. The report recommends that the UK should continue the process of updating the older tax agreements. The legal environment in the UK requires maintenance of relevant information on ownership of entities, owing to the registration requirements for companies and limited partnerships, the money laundering legislation that requires customer due diligence and the requirement to supply tax information to HMRC. The report recommends that the UK should take more action to allow the identification of owners of bearer shares, or amend the law to eliminate these shares. The UK has reported that it is considering the necessary moves.

The previous report in 2011 found that where the name of a taxpayer was not known the UK had problems with identifying information for the purposes of international exchange of information. Amendments made by the FA 2012 give the UK the power to obtain the name of a taxpayer where the party requesting information has provided sufficient details for identification.  There have only been two or three cases where the UK has had to approach a Tribunal after the requesting jurisdiction had not provided the name and address of a taxpayer but still required information on that taxpayer. The report suggests however that the UK must ensure that the new procedures do not give rise to additional delays in providing information requested by another jurisdiction.

The supplementary report notes that the UK is active in exchange of information in tax matters and receives around 1,200 requests for information in a year. Some parties have however suggested that too much time is required before they receive information where a formal information notice needs to be issued and approved by a Tribunal, in particular where the situation involves bank information. The UK had reported that measures were being taken to review the process but although improvements to the system of exchange of information have been noted the report suggests that the effectiveness of the improvements has not yet been verified. No improvements in response times have yet been reported by parties requesting information from the UK.

The exchange of Information on direct tax matters is dealt with by the EOI team in the Centre for Exchange of Intelligence (CEI) in HMRC’s Risk and Intelligence Service. Owing to the extensive information held on file, around half the responses to requests for information are answered by the competent authority without any requirement to ask third parties for information.

The report encourages the UK to continue improving the EOI system to address remaining recommendations and send in a follow up report after one year.