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HMRC internal manual

International Exchange of Information Manual

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Reportable Information: Account Closure

Reportable Information: Account Closure

The information to be reported when an account is closed depends on the regime under which the report is made.

An account is regarded as closed according to the normal operating procedures of the Reporting Financial Institution that are consistently applied for all accounts that it maintains. For example, an equity interest in an Investment Entity [see IEIM401700] would be considered closed when that interest is terminated by the transfer, surrender, redemption or cancellation of the interest or the liquidation of the entity.

An account with a balance or value equal to zero or which is negative will not be a closed account solely by reason of such a balance or value.

FATCA & CDOT Reporting

In all cases the account balance or value immediately before closure must be reported.

In the case of a Depository [see IEIM401540] or Custodial Account [see IEIM401580] closed or transferred in its entirety by an Account Holder during a calendar year the reportable information shall be:

  • The payments and income paid or credited to the account during the calendar year up to the point of closure or transfer; and
  • The amount or value withdrawn or transferred from the account in connection with the closure or transfer of the account.

 

In the case of a Cash Value Insurance Contract that has been fully surrendered during the calendar year the Specified Insurance Company will need to report:

  • The total amount paid out to the Account Holder or nominated person at the close of the account.  This will include any amount of interest following maturity where the amount is awaiting payment.

 

In the case of a purchased life annuity, if the annuitant has died or the term has ended, the Specified Insurance Company will have no further reporting requirement if the annuitant died at a time before the annual payment has been made.

The process for closing accounts will differ between institutions and between different products and accounts. The intention is to capture the amount withdrawn from the account in connection with the closure process, as opposed to the account balance at the point of closure given there is an expectation the balance will be reduced prior to point of closure. For these purposes it is acceptable for the Financial Institution to:

  • record the balance or value within five business days of when they receive instructions from the Account Holder to close the account; or
  • record the most recent available balance or value that is obtainable following receipt of instructions to close the account, where a Financial Institution is unable to record the balance or value at the time of receiving instructions to close the account. This may include a balance or value that predates the instructions to close the account if this is the balance or value that is the most readily available.

 

For accounts that close as a result of switching to another bank, the balance calculated as the transferable balance as part of the BACs account switching service.

CRS & DAC Reporting

When an account is closed the Reporting Financial Institution [see IEIM402100] must report the fact of the closure but is not required to report the balance or value of the account at closure. Any amounts paid or credited to the account in the reporting period up to the date of closure remain reportable [see IEIM402220 to IEIM402260].