The Common Reporting Standard (“CRS”): Impact on charities


The CRS is a piece of tax legislation originated by the Organisation for Economic Co-operation and Development (“OECD”) designed to combat international tax evasion by allowing countries to swap information on each other’s tax payers. This is achieved by requiring banks and other ‘financial institutions’ to collect data on ‘account holders’ and report some of it to HMRC annually for onward global exchange.

So how does it affect charities?

Surprisingly for some, charities can be regarded as ‘financial institutions’ and so are caught in the reporting web. The key consequence for those charities is a requirement to collect information on their charitable grantees (‘account holders’) and report on some of them. Reporting charities will also need to collect information from their settlor(s), if living, and may need to report that information as well.

Which charities are caught?

A UK resident charity is regarded as a ‘financial institution’ if more than half of its income is derived from investment income and its financial assets are or have been managed by another financial institution (such as a fund manager) in the last three years.

What are the reporting requirements?

Charities which are ‘financial institutions’ are required to report details of payments made to beneficiaries under the terms of its charitable objects. While this includes discretionary payments, it excludes payments to suppliers for goods and services.


The legislation refers to these beneficiaries as account holders of an equity interest. This includes anyone who may receive a grant directly or indirectly. The charity must report the payments to these beneficiaries where they are tax resident outside the UK in a reportable jurisdiction, usually a member of the OECD.


Due diligence

There is also a requirement for the charity to obtain a ‘self-certificate’ from the beneficiary showing where the recipient is tax resident. If this is outside the UK it should include the name, address and Tax Identification Number. If the recipient is an entity it must also include the entity’s classification.


Impact on UK to UK payments

Though not emphasised in the guidance, the UK is not a ‘reportable jurisdiction’, so grants made to individuals and entities that are tax resident in the UK require only limited due diligence but will not require reporting to HMRC. For UK registered charity grantees, due diligence can simply consist of confirming the charity’s registered number.



HMRC has published guidance for charities. The guidance is short and links in to HMRC’s general guidance on the Automatic Exchange of Information in several places. It explains the due diligence and reporting requirements in very brief terms and charities may find it lacking in detail, particularly where the more general guidance may be difficult to apply to the circumstances of charities. It also uses conditional language because HMRC was not initially aware that the legislation caught charities.


Those charities that are caught by the rules must start to act now as their first reports are due for the current tax year and must be made by 31 May 2017. For more information, please contact your usual Blick Rothenberg contact or Mark Hart at