IEIM740060 - Reporting Obligations for Reportable Taxpayers

Where a reportable taxpayer has to report under the Regulations, the report must be made within 30 days beginning with the day after the day on which the first step of the CRS avoidance arrangement or opaque offshore structure is implemented.

When the first step of an arrangement is implemented is a question of fact. Consider two separate scenarios:

1. A company has designed an arrangement in-house which will involve the transfer of assets to an overseas subsidiary. The transfer is such that this will be a CRS avoidance arrangement. It is still finalising the precise details of certain later steps in the transaction, but it does not want to risk delays, so it incorporates a new company in the overseas jurisdiction ready for the transfer to happen as soon as the details are finalised.

2. A company is considering transferring some assets to an overseas subsidiary but has not yet worked out the details. It does not yet know whether the transaction would be a CRS avoidance arrangement or opaque offshore structure, as the design is at too early a stage. However, to avoid delays at a later date, it decides to incorporate an overseas subsidiary now in case it does decide to go ahead.

In the first example, incorporating the subsidiary is the first step in implementing the reportable arrangement. However, in the second example, the incorporation cannot properly be considered to be the first step, as the arrangement’s design has not yet been agreed and no decision has been taken as to whether or not to go ahead with the arrangement.