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United States legislation, known as the Foreign Account Tax Compliance Act (FATCA), requires financial institutions outside the US to pass information about the accounts of US persons to the US tax administration, the Internal Revenue Service (IRS). Any financial institution that fails to comply with this legislation is subject to a 30% US withholding tax on any US source income. The withholding and account due diligence requirements by foreign jurisdictions commenced on 1 July 2014 (extended from the previous start date of 1 January 2014)¹, and the first report of information under FATCA, due in 2015, should include information about accounts maintained during the 2014 calendar year. The IRS opened its online registration system for FATCA on 19 August 2013².

UK data protection law previously precluded financial institutions from complying with the US requirements, but the UK has introduced legislation which enables UK financial institutions to provide the data the US requires without breaching such restrictions (by requiring financial institutions to first pass the information to HMRC, who will then exchange it