The United Kingdom joined the Common Reporting Standard (the CRS) in 2017. Financial institutions (such as banks, insurance, investment companies and trusts) are required to collect information on the financial accounts of their customers in accordance with the CRS. This includes identifying tax residence of account holders and reporting to HM Revenue & Customs (HMRC). HMRC then channels information to a relevant tax authority on an annual basis. Tax information includes name, address, tax identification number and account balance or value.

In 2018 the UK exchanged information for the 2017 reporting year with 80 countries, including Russia.

Interestingly, it appears from the UK HMRC International Exchange of Information Manual that Russia was expressly excluded from the list of reportable jurisdictions for 2019. The reason for that was unclear since both Russia and the UK have joined the CRS and implemented it in their domestic legislation. Since no explanation was provided, I had to seek clarification directly with HMRC and can confirm that:

  1. Following exercise of its sovereign right by the UK, Russia is not a reportable jurisdiction in 2019, for the reporting year 2018, under the CRS. In this connection, account holders identified as Russian tax residents in returns for the year ended 31 December 2018 are not reportable to Russia by the UK.
  2. Authorised agents are still required to comply with their internal due diligence procedures to identify tax residence of their account holders etc but they do not need to send reports in relation to account holders who are Russian tax residents for the reporting year 2018 to HMRC by the filing date (31 May 2019).
  3. HMRC will not be sending any reports received under the Automatic Exchange of Information (AEOI) or CRS to relevant tax authorities in Russia in 2019 for the reporting year 2018.

We do not know yet how the CRS will work going forward in relation to reporting in future years. However, this latest news may have a significant direct impact on bankers and other authorised agents and their Russian resident clients at least for the current year.

If you wish to discuss this topic further or have any other questions, please contact Elena Solovyeva or any member of the Edwin Coe Tax Team.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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