HMRC, FCA and PRA tell George Osborne they’ll work more closely together to share information at regular meetings after Banking Standards Review
Financial regulators and HMRC have outlined plans to work more closely together in the wake of the government investigation into banking standards.
The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) will hold regular meetings with HMRC to better share information and expertise on “taxation, regulatory, prudential and consumer implications” that result from policy work and “emerging trends and issues” the three bodies said in a letter to George Osborne.
In a join letter to the chancellor, they said:
A Memorandum of Understanding between HMRC and the FCA and another between HMRC and the PRA has been put in place. These set out the high-level agreements and principles governing the exchange of information between HMRC and the FCA, and between HMRC and the PRA, which would help to promote information sharing between HMRC and the Regulators.
We have agreed furthermore that we will continue to explore ways in which we can further improve the sharing of information and providing technical assistance expertise amongst the organisations in ways that will enable each of us to ensure that we fulfil our relevant functions as effectively as possible.
The government made recommendations that the three should work more closely together after the Banking Standards Review, the investigation into the banking industry which was published last year.
The PRA has also agreed to periodical reviews by the National Audit Office of how effectively it uses its powers to promote the sharing of information with HMRC
After considering a third recommendation from the report, that it should consider using its powers to commissioned reports on behalf of HMRC on a specific function of a bank’s business, the PRA and HMRC agreed the tax bodies powers were already sufficient.
Information HMRC will share with regulators
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The opportunity to discuss the tax implications of ad-hoc transactions or capital structures of firms and the tax treatments of new or complex products of firms.
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The highlighting of changes in the tax regime and their implementation, where this might cause prudential or conduct issues in firms.
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Raising the Regulators’ awareness of ‘tax avoidance’ schemes and the motivations for such structures as well as the risks therein.
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Providing early warning of significant tax liabilities, disputes, or tax investigations underway.
Information regulators will share with HMRC
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The opportunity to discuss significant proposed changes to prudential or conduct requirements in advance.
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The highlighting of emerging trends or issues in relation to prudential or conduct motivated structuring of transactions that the relevant Regulators think might have tax implications for the firms.
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Technical support to enable HMRC to gain a better understanding of the regulatory or conduct requirements underlying certain tax structures.
Regulators said they expect most disclosures of confidential information to be in connection to a criminal investigation.
All three will be subject to relevant laws about the confidential sharing of information however, including the The Commissioners for Revenue and Customs Act 2005 and the The Financial Services and Markets Act 2000, bar certain legal exceptions.
The first meeting between the regulators and HMRC will take place in 2015.