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HMRC internal manual

International Exchange of Information Manual

Financial Accounts: Excluded Accounts: Escrow Accounts

Financial Accounts: Excluded Accounts: Escrow Accounts

An Escrow Account is an account held by a third party on behalf of the beneficial owner of the money in the account. Such accounts are excluded accounts where they are established in connection with any of the following:

a) A court order, judgement or other legal matter on which the third party is acting on behalf of the underlying beneficial owner for example, an account held by a law firm appointed by the Court of Protection to look after the affairs of a vulnerable person.

b) A sale, exchange, or lease of real or personal property where it also meets the following conditions:

  • The account holds only the monies appropriate to secure an obligation of one of the parties directly related to the transaction, or a similar payment, or with a financial asset that is deposited in the account in connection with the transaction.
  • The account is established and used solely to secure the obligation of the parties to the transaction.
  • The assets of the account, including the income earned thereon, will be paid or otherwise distributed for the benefit of the parties when the transaction is completed.
  • The account is not a margin or similar account established in connection with a sale or exchange of a financial asset; and
  • The account is not associated with a credit card account.

 

c) An obligation of a Financial Institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time.

d) An obligation of a Financial Institution solely to facilitate the payment of taxes at a later time.

Accounts provided by a non-financial intermediary acting in that capacity (such as non-legal escrow type accounts) that meet the conditions above will also be excluded accounts.

Periodic payment orders in connection with an escrow account are not considered to be Reportable Annuity Contracts [see IEIM401680].

Where the financial account does not meet the conditions above please see IEIM401870.