Country by Country Reporting (CBCR) notifications

Wed 06 Dec 2017

HMRC has updated its internal guidance on country by country reporting to include a preferred excel template for providing CBCR notifications. The HMRC guidance is also updated to say that HMRC’s online portal will validate a CBCR file before the option to submit is made and can therefore be used to test the validity of a file. There are some further points below concerning possible notification requirements of UK entities of foreign multinationals within the scope of CBCR. The possibility of country by country reporting was also raised in Parliament on 22 November.

Further points on CBCR notifications to HMRC

HMRC’s excel notification template does not cover all the notification information required where a UK entity is excluded from filing a UK CBCR report under SI 2016/237 (as amended by SI 2017/497) Reg 3B(6)(c) concerning ‘exception B’. This applies where a CBCR report is filed voluntarily in another jurisdiction which HMRC will receive under an information exchange agreement and where the top UK entity makes a notification to HMRC about the CBCR having been filed.  For example it does not include a space for adding the date the report was filed in a foreign jurisdiction.  In order to satisfy exception B, the UK entity must notify HMRC, before the UK filing deadline, of the following information:

• The identity of the constituent entity that has filed the report;
• The jurisdiction in which the report was filed;
• The date the report was filed.

HMRC’s guidance has examples on notification deadlines including the above situation at IEIM300029.

The OECD summary found here includes a list of jurisdictions at various stages of implementation of their CBCR reporting requirements.

Those with potential UK reporting obligations that are relying on the fact that reports are submitted in non-UK jurisdictions (for not filing a CBCR report in the UK), should ensure the appropriate information exchange agreements with the UK are in place and working properly.

Parliamentary comments on public country by country reporting

In response to a call for the immediate introduction of public country by country reporting, the Financial Secretary to the Treasury (Mel Stride) commented as follows in Parliament on 22 November:

“The right hon. Lady also asked a very important and pertinent question about how many countries would need to say yes for us to feel that we could go ahead on a multilateral basis. I suppose that gives rise to other questions, such as which countries and what mix of countries. She can rest assured that as and when, as we hope, we reach the point when sufficient countries say they will sign up, we will be pleased to do so…..

We are not against [public] country-by-country reporting. We welcome the opportunity to move to exactly that situation, but to do so unilaterally will not work, for at least three reasons. It would certainly make the UK less competitive than other tax jurisdictions. I see no reason why any particular business should want to go to a country with that in place as strongly as they would want to go where it is not in place. If it were just us alone, we would also be in the position of not being able to get public disclosure if a UK company had associated non-UK companies in other jurisdictions, not under that company’s control. The big advantage of going multilaterally is the standardisation of the standards that we set and the rules and regulations around each particular step.

The Government will continue to work towards bringing in not just country-by-country reporting as we have at the moment, but public country-by-country reporting.”

Please get in touch with a member of the Mazars International Tax team or Corporate tax team for a further discussion on meeting country by country reporting obligations.