All credit unions will be required to register with HMRC by the end of 2025 to comply with international tax regulations if new legislation is passed as currently drafted.
Current Situation
Credit unions already have a requirement to obtain self-declarations of members’ tax jurisdictions and to report relevant accounts to HMRC. Credit Unions also need to obtain fresh self-declarations for any members that have moved abroad.
Some Credit Unions are just asking if members pay tax in the UK. Application forms should, however, request all jurisdictions the member is tax resident and provide for accepting multiple tax jurisdictions and Tax Information Numbers (TINs). This is as some members may be dual resident. When members move abroad the credit union should re-establish tax residency, and if unable to confirm sole UK tax residence, report to HMRC. Credit Unions should make sure application forms and any subsequent forms checking residency have a section where the member confirms/attests that the information is correct. More information on the current rules can be found by clicking here.
Proposals
The draft legislation under consultation will, for the first time, make registration mandatory for all credit unions including those that do not have any accounts to report for the first time.
The International Tax Compliance (Amendment) Regulations 2025 provides for yet-to-be specified financial penalties for the following breaches of the regulations:
- Failure to register with HMRC
- Failure to provide information
- Failure to provide a valid self-certification
- Failure to apply due diligence procedures
- Failure to comply with record-keeping requirements
- Late returns
- Inaccurate or incomplete reports
- Failure to provide notification to individual reportable persons.
Credit unions should ensure that – should the regulations be passed as drafted – they register with the HMRC in good time before the deadline of 31 December 2025. Credit unions should also review their compliance with existing regulations in light of the groundwork being laid for future enforcement action in this area.