Your complete guide to submitting with HMRC. Country by Country. Reporting

Transcription

1 Your complete guide to submitting with HMRC Country by Country Reporting

2 Contents The First Deadline 3 Country by Country Reporting Submission Tips 5 Your Reporting Checklist 6 4 Common Filling Errors and How to Avoid Them 7 About Arkk Solutions 9 2

3 The First Deadline Introduced under the OECD s 15-part Action Plan, Country by Country Reporting falls under the BEPS directive. Firms in scope must complete a template containing information such as total annual income, profits, allocations of income by jurisdiction, and number of employees. After filling in one template per tax jurisdiction, multinational entities will submit to their headquarters local tax authority. Tackling global inequalities in taxation income has been hot-topic with policy makers for some time, with the Paradise Papers scandal bringing measurements like the BEPS Action Plan into full focus. The OECD estimates an annual loss of $ bn due to large corporate tax avoidance, and wants to use the new measurement to uncover this missing revenue. To comply, firms with an annual turnover exceeding 750m and multiple entities must submit a Country by Country Report annually. Certain Private Equity funds who reach this threshold inclusive of capital gains may also find they need to file in their jurisdiction of residence. The road to Country by Country Reporting has not been easy, with a number of firms voicing concern at the volume of data required to report successfully, and the surprisingly complex nature of the templates. Something as every-day as obtaining the address of each entity, for example, can become a heavy data-entry burden when using a template with over 50 different sheets of information. The majority of senior tax managers are concerned that there will not be any additional business benefit for the new OECD measurement Arkk Solutions Country by Country Reporting Survey

4 The Next Challenge On November 6 th, HMRC released their latest guidance based on feedback from the CbC portal Beta testing. Whilst we re now in December and the first filing deadline is fast approaching, it s important to note that guidance, both local and at the OECD level, can change. With this in mind, we strongly recommend that you keep an eye on the HMRC website and the Arkk Solutions blog as the deadline approaches, in case there are any last minute changes you need to be aware of. Using this Guide Arkk Solutions are recognised by HMRC for our ixbrl tax returns service, and are bringing this expertise to their newest requirement Country by Country Reporting. We re committed to providing the latest news and guidelines to make submission as simple as possible. You can use this guide to avoid common filing errors, tick off mandatory steps in your reporting process, and to follow our advice for submitting successfuly to HMRC. 4

5 Country by Country Reporting Submission tips If you ve finished collecting your data for Country by Country Reporting you may think you re ready to file but think again! There are several steps to a successful submission, so make sure you know what to do before the deadline. When do I need to submit my Country by Country Report? Firms must file within 12 months of year-end. For many MNE s the first deadline is December 31 st 2017 How do I submit to HMRC? First, you must register with the CbC HMRC Portal. To do this, contact HMRC directly through the gov.uk website What happens next? You ll receive a CbCID after registering. You ll need to include this unique ID in several parts of your report including the file name, MessageReferenceID and the DocRefID s Where do I download the templates? Whilst the OECD provide guidance templates, you ll need to obtain templates from your service provider, or build them yourself using the latest HMRC XML schema Can I upload my spreadsheet directly? You must submit your template in XML format, or as a ZIP file of your XML. You must also use the correct XML schema and make sure your submission file size is under 25MB How do I create an XML file? Arkk customers populate a simple two sheet Excel template, which can be generated into XML following the full specs of the latest HMRC schema What happens if I get an error on the HMRC Portal? HMRC are unlikely to offer technical support for the conversion. It s advisable that you have a point of contact to reach out to if you have any XML errors on filing day Can I test my submission? Best practice for a new filing requirement is to test-file before the deadline. The HMRC portal is now live, and filers can start testing their submission straight away 5

6 Your Country by Country Reporting Checklist Are you ready to file? Use the checklist below and find out if you are prepared for the first deadline Registration I registered with HMRC CBC portal I have received my CbCID I have test filed on the HMRC portal Template All my sheets are populated, with each tax jurisdiction on a separate sheet I have included my UTR My CbCID is contained in the SendingEntityIN Conversion I am using the latest XML schema My template is in XML format (or is a ZIP of my XML) The name of my XML document matches my MessageReferenceID, and is contained in each jurisdiction s DocRefID There are no validation errors on the template Submission My submission file size is under 25MB There are no XML errors on the HMRC portal I have support available for any last-minute XML errors If you ticked all options then you re ready to file your Country by Country Reporting! If not, or you have any questions about these steps, contact the Arkk Solutions team today for guidance. 6

7 4 Common Filing Errors (and How to Avoid Them) As December 31 st marks the first Country by Country Reporting deadline there are technically no common filing errors! However, we ve been working with HMRC to make the submission process as simple to understand as possible, and discovered a few challenges along the way. Avoiding these four pitfalls will ensure a simple submissions process, and one less thing to worry about at the end of a busy Q4. 1. The UTR is not in the correct format for Country by Country Reporting Your UTR (referred to as the TIN by the OECD) will need to be consistent for all Country by Country Reporting returns submitted to HMRC. The UTR is a 10-digit number, sometimes ending in the letter K, and may be simply called the tax reference on your previous documentation. * 2. No registration with HMRC You must register with HMRC specifically to submit the Country by Country Report. You can do this by contacting HMRC directly through the.gov.uk website. If you do not register you will be unable to file your submission. * Previous guidance required a space in the middle of the UTR. This has now been reviewed and you will need to provide your standard 10-digit UTR with no space 7

8 3. Invalid or missing CBC ID When you register on the HMRC CBC Portal, you ll be given a CbCID. This will need to be included within the SendingEntityIN in the template prior to conversion to XML. Without it, or with the wrong number entered, HMRC will not recognise your credentials and you ll be unable to file. Make sure you are registered and have your CbCID well in advance of the deadline. Additionally you must make sure that your XML document file name matches the MessageReferenceID. 4. XML errors in the templates XML errors can occur for several reasons, including validation errors with your data or using the incorrect XML schema. Something as simple as using lower case rather than upper case letters for the XML file s character encoding can trigger an error. The best way to avoid an XML error is to have templates with built-in validation rules. This will help you see any problems prior to submitting on the HMRC portal. Additionally, it s best to have support in place from a team who understand the validations and can solve any problems in the XML. With Arkk Solutions, we always provide the most recent XML schema, automatically generate your MessageReferenceID and DocRefID s, and provide clear validation errors to flag up any issues with your data entry. We ll also have our team of support experts on hand throughout the filing period to make sure that you can solve any XML errors straight away. 8

9 About Arkk Solutions Arkk Solutions are market leaders in the regulatory reporting industry with offices in London, New York, Belfast, and Dublin. Arkk Solutions mission is to help firms comply with regulations and strive to make financial reporting simple. Our clients include banks, multi-nationals and members of the FTSE 350. All of our customers experience our high-quality solutions and world-class customer support. Country by Country Reporting Arkk first began exploring Country by Country Reporting with clients and partners in Since then, we ve hosted a range of events, webinars, and roundtables to make sure we re fully up-to-date with the latest requirements, and to help our clients prepare for the first filing deadline. The Solution We believe in simple and robust solutions, and our Country by Country Reporting tool allows you to convert your data in one click. All you need to do is populate the Excel template, and our cloud based conversion technology does the rest. We re working closely with local tax authorities in the run up to December 31 st. The HMRC portal is now open, and our clients are conducting test-filings ahead of their first Country by Country Reporting submission. To find out more, get in touch with the Arkk Solutions team today via enquiries@arkksolutions.com, or call us on Arkk Solutions. All Rights Reserved.