George brings this to our attention:
The UK Government worked to include language about discrimination in the FATCA IGA.
j) The Financial Institution must not have policies or practices that
discriminate against opening or maintaining accounts for individuals
who are Specified US Persons and who are residents of the UK.
But was that nothing more than window dressing?
National Savings & Investments (NS&I) was established as a people’s bank in order to provide products that had the backing of HM Government;
In 1861, the Palmerston government set up the Post Office Savings Bank – a simple savings scheme aiming to encourage ordinary wage earners to “provide for themselves against adversity and ill health”. We separated from the Post Office in 1969, becoming National Savings. In 1996, we became an Executive Agency of the Chancellor of the Exchequer. NS&I (National Savings and Investments) is now one of the largest savings organisations in the UK, with over 25 million customers and more than £100 billion invested.
One of their products is a simple savings account called Direct Saver. Minimum investment is £1.
*************
Through 30 March 2014, anyone could save through Direct Saver;
What does HM Government do as of 1 April 2014 with this simple and popular savings vehicle? It is available to everyone except…
17 . General limitations. Accounts cannot be:
(a) opened by a person who is either a US citizen and/or a US resident for tax purposes;
(b) opened by a person who is an undischarged bankrupt;
(c) opened by a person under a legal disability otherwise than in accordance with paragraph 16; or
(d) opened by one person on behalf of another otherwise than in accordance with paragraphs 14 and 16, unless the applicant is acting under a valid power of attorney; or
(e) held in trust.
HM Government is taking the lead with instutionalized discrimination against US Citizens,
OR:
Do as we say and not as we do.
I realize that I should set up a meeting with my building society to explain my new status; however, as they have never asked me, nor do I even know if they realize I have US indica (US birthplace on passport), I’m inclined to not bring it up unless they do.
In the meantime, I’m going to gradually move most of my savings over to my pension fund and investment ISA over the next few years. I will also probably buy some physical gold. I don’t see any point in trying to open a share-dealing account.
The problem at least here in the UK is that even former US citizens/greencard holders will continue to have to regularly prove their non-US persimmons status to be able to open (and even maintain) various sorts of financial products.
It thus seems prudent to stick to deemed-compliant and/or exempted products such as ISAs or pensions, premium bonds, etc.
At least pensions will enjoy more flexibility going forward, thus making them a more attractive way to invest for the future, though wonder if the US could start becoming more awkward and trying to lable them as foreign trusts; I suspect that in the long-term, that HMRC will continue to allow more flexibility with drawdown but try to resolve the potential foreign trust issues by making them more like IRAs or 401k’s: making all
withdrawals taxable (removing the 25% tax-free lump sum), and perhaps raising the earliest allowable age of withdrawal from 55 to perhaps closer to 60.
The UK certainly seems to have caved in the quickest. It’s a poodle. I will be making a donation though to help out. 😉
Is this going to apply to children with one US born parent? Even if they weren’t registered at that architectural monstrosity on Grosvenor Square??
@monalisa1776
Why cry stinky fish? I’d let them do their own dirty work if their intention is to discriminate. At the end of the day, I can’t see how this actually supersedes the Equality Act (2010). But like many laws in this country, they can be unenforced unless you hire a solicitor. That was the experience regarding my child and the Disability Discrimination Act.
@Creature, I agree. I’m inclined to not bring it to their attention though am concerned that if they report my account balances that there could be a mix-up at the IRS with them asking me why I haven’t been filing, fbaring, etc. They might screw up and not keep track of 8854 being filed. I’d imagine that if this happens, that they would start sending out warning letters from 2016-2017.
@MonaLisa, @Creature….
As usual, I fully agree with Creature. You already gave us the clue as to who your building society is. There is an assumption that you are definitely on the electoral roll and the revision that came out this winter.
If you want to “do something” you may want to go online and open up an additional savings account with them after you have logged into your account. You would then rightly state your nationality as British. If anything that would clarify their records if they have you listed as “other” or in case they do have you wrongly as US it would all of a sudden make that ambiguous which would force them to call you.
@Creature “Is this going to apply to children with one US born parent? ”
I think we need to look at what is happening with the advice coming from the compliance industry.
IMO, many financial institutions are no acting ultra vires with respect to the IGA.
When you read the IGA, in theory the already existing KYC/AML requirements were already sufficient.
The UK IGA does not state that you must ask place of birth but that is what is happening. In Canada the CRA states in FAQ that asking place of birth is not required yet financial institutions have started doing just that!!
In defense of the politicians, the IGA was not a threat to those with clinging or lingering nationality. I would term anyone who has relinquished but has indica as someone who has lingering nationality.
So lets look at your question from the compliance industry……
Is a child of a single US born parent a US citizen? Other than some technicalities and disregarding the two day border babies, the answer is YES. That person is reportable.
IF a bank in the UK can ask place of birth which is not the law in the UK, nor was it asked for in the IGA, then what is stopping a bank from asking “Do you have a US Citizen parent?”
Bottom line, all non US born children who had at least one parent who is/was a US Citizen, if that information becomes known the compliance people would likely say report. It is indica!!
@MonaLisa, @Creature…. “The problem at least here in the UK is that even former US citizens/greencard holders will continue to have to regularly prove their non-US persimmons status to be able to open (and even maintain) various sorts of financial products. It thus seems prudent to stick to deemed-compliant and/or exempted products such as ISAs or pensions, premium bonds, etc.”
The IGA has created defacto second class British Citizens. Even though I relinquished, its impossible to shake “lingering nationality” which is remaining indica. A former American, who has British Citizenship should not have to be constantly proving they are not something. Nor should that person have any chance of their private information sent to a foreign government.
You are right, we have been limited on what we can do financially wise unlike other British Citizens.
The flip side of that is what we are forced to do is actually good financial planning; priority wise.
1.) You and partner fully fund ISA each and every year to include Junior ISA for children.
2.) The closer you are to 55, fund a pension plan as much as possible.
3.) Bank ethically!!! Go to the UK credit union search site, find the ones you are eligible for and fund credit union accounts!!
4.) While less ethical than credit unions, open accounts with smallest nearest building society.
5.) Physical gold has a place in a portfolio.
6.) Real estate including buy to let has a place.
Sadly we are put in the following corner. Does a British Citizen resident in the UK, who is not a US citizen but has “lingering nationality indica” wish to take the chance that his/her extensive and private financial information be disclosed to a foreign government where there is no recourse to correct that disclosure and get it back?
@George, sounds like a game plan. I’ve grown so cynical from all this and have concluded that sometimes it’s realistically just a case of trying to survive in an unfair world.
I wonder if Boris Johnson has investments with them? Or, perhaps, his children? They’re all Americans.
This action of NS&I is even more ridiculous when one considers that HMRC’s own guidance regarding the UK-US IGA says that NS&I is FACTA compliant and therefore not need jump through the reporting hoops. On page 70 of http://www.hmrc.gov.uk/fatca/130531-guidance.pdf it says,
3.13 Certain Other Tax Favoured Accounts or Products
The following accounts or products are not to be treated as Financial
Accounts for the purposes of the legislation:
– Premium Bonds – where issued by NS&I (UK National Savings and
Investments).
– Children’s Bonus Bonds – where issued by NS&I (UK National Savings
and Investments).
-Fixed Interest Savings Certificates – where issued by NS&I (UK
National Savings and Investments).
– Index Linked Savings Certificates – where issued by NS&I (UK National
Savings and Investments).
@mushi, his children would not be US as Boris did not spend the requisite number of years in the US.
@George
Cheers for that information. Particularly the advice on credit unions. On the ethics alone it’s a good plan. I just found my local one. Regarding building societies, there are building societies and then there is a ‘building society’ (you probably know which one I am referring to).
@Creature, Interesting about A building society is that they have not gone hypercompliant. Yet I found a couple smaller ones that have gone hyper.
The IGA is clear and we know UK onboarding with KYC/AML is of a high standard.
Do you remember when the building societies all got rid of their Jersey and Isle of man branches? That was a smart move so they were forward FATCA thinking.
The IGA is clear, a building society only needs to concern itself if a US person leaves the UK and then they can comply not by reporting but by simply closing the account.
I keep getting the impression that the IGA was written by a team of Americans and some were concerned about ex pats while a vein of that writing team said screw them all.
@Creature one more thing………..think this out with me…….
Under KYC/AML rules, an under 18 can use a birth certificate to open an account as a piece of identification.
The IGA uses language “unambiguous US place of birth” but it does not refer to applicant.
Lets assume a UK born 17 year old student, who is a UK citizen and has two US born parents, goes to open an account at HSBC (hypercompliant).
UK born student uses a long form UK birth certificate to open the account but states they are a UK citien born in Devon.
I hate to say this but I think the 17 year old would get ratted out?
@George, as my building society have not hassled me at all, I’m inclined to leave sleeping dogs lie, especially because making a fuss might just raise suspicion. I have my CLN and a copy of my tax returns, 8854, and FBARS if I ever needed to prove my past compliance and non-US personhood.
If they do report me and I subsequently hear from the IRS in the mistaken belief that I was still in their eyes a US tax person (perhaps if they had lost track that I’d filed 8854), I would probably be able to clear it up with some letters and phonecalls, perhaps with a notarized statement from my accountant to confirm things.
I no longer have any assets in America so am not a low-hanging fruit. I am planning to gradually move my remaining savings into my investment ISA and pension plan so that my savings will drop well below the $50,000 Mark.
I’ve often wondered if it might be safer for former citizens to continue filing 1040—NRs with zero’s to emphasize to the IRS that they are no longer US persons, especially since there will inevitably be over-reporting from FFI ‘s.
I suspect though that if FATCA does go through, that the IRS will be so overwhelmed with data starting in 2015 that they will probably not start assessing fines and audits till at least
2017; plus the first investigations would probably be on extremely wealthy cases as they’ll need to prioritize. Plus hopefully enough pushback will cause it to Peter out anyway!
@monalisa1776
I don’t get what your saying here. So you have a CLN. Maybe check your status with a lawyer but I would think you would be out of range of the IRS. If that’s the case and you get a letter from the IRS why wouldn’t you print out a large picture of the middle finger (see I have acclimatized to the yank stuff) and post it to them?
If you have gone to all that trouble why wouldn’t you take advantage of it?
For example I paid my Obama tax in the OVDP and returns 2003-2010 are closed except for fraud. If they try to audit me on those years I am going to have some fun. It’s going to be like office space when the hypnotized guy gets asked about his job!
@George
The long-form birth certificate provides too much information for a simple identification. Outside of all of this and just on general principle, why should any private business organisation have to know where anyone’s parents were born? I’d say a passport is better form of ID. I use my UK passport as my standard ID for everything. If someone was born in Devon, why not just use a UK driving licence?
@Creature, you would be surprised at the number of young students who have to use a birth certificate to open a financial account!! Typically, they are lacking any form of ID. I would say most do not have a drivers license or passport.
@Neill, my main concerns now are that either my building society might in future demand (on threat of freezing my account) that I prove direct acknowledgement from the IRS and FINCEN that I have successfully logged out of the US tax system. A CLN itself still doesn’t prove to a financial institution that I am now no longer a US person for tax purposes.
I have my CLN and copies of my filed tax returns and FBARs but can only prove receipt for the FBARs filed since 2011 online. I have can’t prove to my bank that I filed my earlier FBARs because, in retrospect, I stupidly didn’t send them registered delivery! I am assuming that everything will be fine but it’s still going to be open-ended to all the still-open statutes of limitation finally close in 2020.
My other concern is that if the IRS have somehow made a cock-up and not fully realised that I’ve renounced; if my building society reports my account, they might send me letters asking me why I haven’t filed for 2014, etc, (expatriated 2013).
Of course I’m just being a worrywart as usual but am sure that over-reporting will inevitably occur, even with former citizens. This is why I’m not sure if I should bring all these issues to my building society’s attention at present, especially as they haven’t been bothering me over it. I could set up a meeting and try to resolve it but it could backfire with them subsequently demanding all the documentation and proof at some point…see what I mean? So am inclined to leave sleeping dogs lie.
ML. ‘So am inclined to leave sleeping dogs lie.’ Very sensible
UK resident for about 40 years, I renounced my US citizenship nearly 2 years ago. Since then, in my normal day-to-day dealings with UK financial institutions, I have been surprised to have not yet noticed any FATCA-related changes. However, this must surely now change? I worry that the non-erasable fact of having been born in the US will prove to be an eternal thorn in my CLN-reinforced side, despite the 8854, decades of US tax form filing & years of scrupulous FBAR-ing. Have any other UK- or EU-based former US citizens had problems arising from their a US birthplace?
I do not wish to provide a direct link as I think thats a bad thing to do.
More “expat cleansing”…..in the UK;
“We cannot open an ISA for you , or a Junior ISA for a child , if you , or the child , are, and
we will close your account if you become, a US citizen or a US resident for tax purposes.
You must inform us immediately if you become a US citizen or a US resident for tax purposes”
New terms and conditions in 2014, that did not apply a few years ago……..
Thank you Carl Levin!!!!
So this is now being done. In breach of the Equalities Act. Against HMs Government’s own regulations.
I think Don tried the firm of solicitors that previously handled the discrimination case against the Iranians with little or no luck.
British Brockers, tell me if I am wrong, but I think that British people have grown very tired of the one-sided ‘special relationship’. As result we will be looked at not as UK citizens (which we are) but as ‘tourists’ from a country people are generally sick to the back teeth of. This might explain the lack of enthusiasm for some solicitors to take this up??
This is going to be a real mess when you have 65 year old grandmothers who have lived here 64 years because their British mums decided to leave their GI husbands, take them and move back to the UK a few years after the end of the war. We have number of people who fall into that category. Are they going to close their accounts? Imagine the headlines in the Daily Mail…
@Creatureoutside, I have found that British people are superficially sympathetic but consider it not their problem. ‘Why not go down to the US embassy and see if you can’t get some help there, etc.’
@monalisa1776
Then the conclusion is (for me) that for anybody who hasn’t already relinquished or renounced and has decided to live in the UK as a British citizen to go ahead and get the formal CLN.
@Creatureoutside, exactly. They feel that If someone wants to maintain dual nationality, they have to accept the duties of both citizenships. I can actually understand that argument, but what I can’t understand is why the US has made tax compliance too complex to be affordable.
In other words, I would have been willing to accept a small degree if double taxation if it came to perhaps an extra 2% of my gross income. But what I couldn’t live with we’re the ongoing +100 page tax returns, the +$2500 accounting fees, all the restrictions on what is normal financial planning here, and of course the draconian threats for mere foot faults in the burdensome reporting. I also resented that I would have no financial privacy.
I simply concluded that the ‘membership dues’ we’re too burdensome so renounced. And yet I will continue to have to prove my now non-US personhood which could technically still be difficult, even with a CLN, if the banks want to be snarky. I will also always be nervous when I fly into the US each year to see my folks, as was actually detained and questioned the first time I entered on a UK passport!!
I am afraid to say it but the reality is that we are second-tier citizens.