HM Revenue and Customs Brief 33/14 - reporting Payment Protection Insurance
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Issued 1 October 2014
Who needs to read this?
Financial institutions that make returns to HM Revenue and
reporting payments of interest in redress payments for Payment
Protection Insurance (PPI)
mis-selling. The changes below make additions to the list of Fully
countries when reporting interest in redress payments.
All Financial institutions who make PPI
redress payments for people resident outside the UK need to report such
payments to HMRC
with their Bank and Building Society Interest (BBSI)
or Other Interest (OI)
returns where the country of residence of the individual is on the list
Where the individual lives in an EU Member State, financial
institutions should use the EU Savings Directive (EUSD) reporting
structure and system. This will allow all reports for EU Member States
to be in the same format.
Payment Protection Insurance (PPI) was
mis-sold by some financial institutions and they are currently making
redress payments to compensate people who suffered from the
mis-selling. Such payments contain an element of interest; that element
is taxable when paid to a person in the UK.
Some of the people getting the redress payments live outside
the UK. The normal system for reporting interest paid on a UK account
to a resident of another country for:
- individuals who live in FR
countries and the UK is through the annual Schedule 23 returns
- individuals who live in another EU Member State is through
the annual European Union Savings Directive return
The information gathered about individuals living in other
countries enables the UK to meet its obligations under international
agreements to exchange information with those countries. However, these
redress payments are not reportable under the normal arrangements
applying for the EUSD.
So that the UK continues to meet its international obligations
decided to increase the number of FR
countries. This is to ensure that all PPI
redress payments that include an element of interest paid to residents
of these countries are fully reported. Also information about the
payments can be exchanged with the country concerned.
The information reported to HMRC in the UK
is then sent on to the relevant country. In the case of individuals who
live in EU countries HMRC
has decided to use the EUSD
format to require this information. This makes it more straightforward
for financial institutions to know what to report; the data can then be
sent with other EUSD
data to Member States.
How the change
will be implemented
are announcing the increase to the list of FR countries to give
the standard 6months’ notice of changes to the FR countries list. The
additions to the list only cover PPI
interest payments. All other interest paid to residents of the new FR countries is
already reportable using the standard EUSD reporting
requirements. Where information is reported using the EUSD format it
does not need to be included in the UK domestic return for other FR countries.
The existing FR countries
Australia, Canada, Japan, New Zealand, Norway, South Korea,
USA; and the UK dependencies of Anguilla, Bermuda, Cayman Islands,
Turks and Caicos Islands.
These all remain on the list and will be joined for the Fiscal
year starting 6 April 2015 by:
The additional FR countries
These are in addition to those FR countries mentioned
Austria, Aruba, Belgium, Bonaire, St Eustatius and Saba,
Bulgaria, British Virgin Islands, Croatia, Curaçao, Czech Republic,
Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece,
Guernsey, Hungary, Ireland, Isle of Man, Italy, Jersey, Latvia,
Lithuania, Luxembourg, Malta, Montserrat, Netherlands, Netherlands
Antilles, Poland, Portugal, Republic of Cyprus, Romania, Sint Maarten,
Slovakia, Slovenia, Spain, Sweden.
Returns of interest paid by financial and other institutions
are made annually under Sch 23 to Finance Act 2011. The returns
covering UK residents are called BBSI
return and OI
return depending on the institution they are made by. Returns of
interest paid to residents of the EU outside the UK are made under the
terms of the EUSD
which has been incorporated into UK law through the Reporting of
Savings Income Information Regulations 2003 (SI 2003/3297). The
information reported for UK and EU residents is not exactly the same.
guidance on interest reporting is provided through the website at the
17 and 18 reports of interest and EUSD
or by phone from Nick Wright on Telephone: 03000 576 380.
About the Author
© Crown Copyright 2014.
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Article Published/Sorted/Amended on Scopulus 2014-10-06 09:03:49 in Tax Articles