Deadline approaches for charities affected by the Common Reporting Standard

  • Insight

18 May 2017

The first reporting deadline for charities affected by the Common Reporting Standard (“CRS”) agreement, which came into effect on 1 January 2016, is imminent.

The CRS is part of the legal framework which makes provision for the automatic exchange of financial accounting information between different qualifying countries in order to help combat tax evasion. It will apply to charities that make payments to qualifying overseas beneficiaries or under a loan or debt agreement to individuals or entities in a reportable country, if your charity meets the criteria set out below. It will not apply to overseas payments made for the provision of services.

The first reporting deadline is 31 May 2017.  If the CRS does apply to your charity, then you will be required to comply with additional due diligence requirements (which are explained below) and make an annual report to HMRC about the beneficiaries or entities concerned.

What charities will CRS apply to?

If your charity receives most of its income from grants, legacies, gifts or donations, then it is unlikely that the CRS will apply.

If however your charity meets the following criteria, then please read on because the CRS may apply and your charity may be regarded as being an “investment entity” and therefore a “financial institution” under the CRS.

The criteria are that:

  • more than 50% of your charity’s gross income must come from investments, reinvestments or trading in financial assets; and
  • if all or part of your charity’s financial assets are professionally managed on a discretionary basis by a financial institution such as a firm of investment advisers who invest, administer or manage all or part of your charity’s “financial assets”, or if your charity provides financial services. “Financial assets” includes investments such as stocks, shares and bonds as well as insurance or annuity contracts. It will not include any direct investment in property or cash, so rental income and interest on cash deposits are excluded.

Both these criteria must apply during the shorter of the following time periods:

  • the period during which your charity has operated; or
  • the 3 year period ending on 31 December in the year prior to the year in which your charity’s status as an investment entity is to be determined.

Reporting requirements

If your charity meets the above criteria and makes overseas payments to;

  • an entity or beneficiary (who are regarded as having an “equity interest”) and who are tax resident outside the UK in a country which has signed up to the CRS; or
  • an entity or beneficiary who have a debt interest (where there is a loan or debt interest) where the entity or individual is based in a reportable country where the entity is also resident or managed;

then the CRS will apply to your charity.

CRS can also apply to donors to charitable trusts where the donor has made a donation that is subject to certain conditions about how it is used.

There are currently 101 countries that follow the CRS, including the UK. Please see the HMRC website for further details of the countries concerned.

The CRS rules refer to the entity or individual receiving the payment as being an “account holder” that is regarded as being a reportable person. Your charity must therefore collect self-certification details for due diligence purposes which include the following;

  • Name and address of the individual or entity concerned (or entity status);
  • Tax residence;
  • Taxpayer identification number or similar; and
  • For individuals, their date of birth.

Your charity must use this information to prepare detailed “financial accounts” for the year to 31 December 2016 in the correct format, which must be reported to HMRC by 31 May 2017 using the Automatic Exchange of Information Online Service.


We recognise that the CRS provisions are complicated and it is not always clear whether or not they may apply to the particular circumstances and set up of your charity. If CRS does apply, then information gathering and reporting obligations may present unique challenges for charities. If you require advice or further information about these changes, or if you are not sure whether the CRS applies to your charity, please do not hesitate to contact Victoria Simpson on or by telephone on 0131 625 8162.

For further information about these changes, contact