Once upon a time…
Britain was a great country. Now, Britain has adopted the “Gentiloni Doctrine“. You may recall that the doctrine includes:
1. The United States has the sovereign right to declare who its citizens are; and
2. The United States has the right to impose worldwide taxation on those citizens.
Yes, Britain was a great country that should have stood up to the United States: Love Actually Scene – Hugh grant Speech https://t.co/m5ptkqIsoE via @YouTube
— U.S. Citizen Abroad (@USCitizenAbroad) June 19, 2020
The Tension Between The GDPR, Automatic Exchange Of Information and FATCA and The CRS
The tension is well summarized in this page from the Mishcon de Reya site:
As the exchange of information takes place automatically, the CRS raises fundamental questions concerning its compatibility with the data protection principle that personal information should only be processed to the extent it is “necessary” to achieve the stated objective. As mentioned in the recent Tax Aware article, the House of Lords has warned about the steady accretion of powers in the hands of the tax authorities since 2012. There seems to be little doubt that the introduction of the GDPR in May 2018 has brought to light an inherent conflict between the CRS and individuals’ fundamental rights to data protection and privacy. Whilst tax authorities must be put in a position to fight tax evasion, they must also respect individuals’ fundamental rights and not expose their data to the risk of hacking. Additional concerns exist where individuals live in high risk jurisdictions.
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Q. What happens when the privacy guarantees in the GDPR collide with the information exchange rules in FATCA and the CRS?
A. The GDPR protects individuals from governments (as long as those governments don’t themselves need protection from the United States)
From @HelenBurggraf: "Latest in UK FATCA challenge by ‘Jenny’: Complaint not upheld; appeal costs being weighed" https://t.co/QbBknEoWqs pic.twitter.com/A4dp03pCe4
— U.S. Citizen Abroad (@USCitizenAbroad) June 19, 2020
As reported by Helen Burggraf at American Expat Finance:
The decision, which finally was handed down on May 29, more than eight months after the complaint was filed, will have been met with disappointment by Jenny’s hundreds of supporters, many of whom contributed generously to her crowd-funding pot.
As of this week, the 452 pledges Jenny has received totaled £81,698, which Jenny told her CrowdJustice.co.uk supporters on Tuesday was “68% of our stretch target of £120,000”.
As reported here last month, lawyers for “Jenny” – as the complainant in the case is known, to her supporters and the press – had been preparing themselves, and their client, for an unsatisfactory outcome, citing suspicions that the ICO would allow “policy concerns”, alongside such political considerations as the importance to the UK of maintaining good relations with the U.S., to be taken into account when it issued its decision in the politically-sensitive matter.
n her complaint, Jenny, who came to the UK around 20 years ago, and who has been a British citizen since 2010, argued that by providing her personal financial information to the U.S. tax authorities in compliance with the U.S. tax evasion law known as FATCA, HM Revenue & Customs had violated her fundamental rights to data protection and privacy, as set out by the EU’s General Data Protection Regulation (GDPR).
You can read the rest of Ms. Burggraf’s article here.
Bottom line:
The ICO has ruled against Jenny. The decision was that the FATCA IGAs, whatever they may be, simply don’t violate the individual rights legislated in the the GDPR. Apparently the decision is not publicly available.
And the prognosis?
On June 16, 2020 Jenny delivered the following message to her supporters:
Update on FATCA & HMRC: breaching my human rights to data protection and privacy
Dear generous supporters,
I just wanted to take a moment to thank you very much for your patience while my legal team finalises their next steps and strategy going forward.
Since the Information Commissioner’s Office (ICO) sent us their response on 29 May, the team have undertaken a huge amount of work to ensure that we are in as strong a position as possible as this challenge enters a new phase. The ICO dithered over our Complaint for nearly seven months, refusing to give us any information about the questions they asked HMRC, or HMRC’s responses, despite my legal team’s numerous requests for the ICO to fulfil their commitment to transparency. So I really appreciate your understanding as my legal team devotes the necessary time to thoroughly analysing the ICO’s response and devising a plan that will take this case to a successful resolution.
You will see on the Mishcon de Reya website that my legal team have published the case correspondence in the public interest (which may give the ICO an idea of what transparency actually looks like). The correspondence demonstrates that my legal team are tackling an unprecedented and immensely complicated injustice in dark circumstances where the government is placing itself above the law and attempting to exploit the very complexity of FATCA and AEOI to obfuscate its violations of our fundamental rights. I’m sure that with the odds already stacked high against us, it would make the ICO and HMRC very happy indeed if we were to shoot ourselves in the foot by sloppily leaking a half-baked strategy and poorly-thought-out analysis of the ICO’s response in a big rush. The ICO’s response showed us that my legal team’s predictions (as reported in the American Expat Financial News Journal on 27 May) were largely correct, and they appear determined to white-wash these violations of our data protection and privacy rights at all costs, even that of their own mission and institutional integrity.
Thank you for the contributions that you have made to the campaign within the past couple of weeks, which have taken us up to 452 pledges totalling £81,698. This is 68% of our stretch target of £120k. It’s incredible that this campaign has now been live for 280 days! I am so grateful to you all for your commitment to justice and for building the profile of the campaign in readiness for the next stage of this challenge.
Warm regards
Jenny
What does this really mean?
Individual Americans are the biggest problem …
The real tragedy is NOT the decision of the ICO. The real tragedy is the shockingly small number of people willing to support Jenny’s lawsuit. Governments do respond (in varying degrees) to public pressure. The perception of the need to redress public grievances is directly proportional to the perception of how important the issue is to the general public. When those who are directly affected, won’t support initiatives for change, there is no reason for governments to take these lawsuits seriously. The United States is a serious problem. Other governments (including Canada and the UK) are serious problems. But the MOST SERIOUS problem is the failure of individuals affected, to stand up for themselves and support those who fighting for change! If people are unwilling to stand up for themselves, why do they think that governments will take them seriously?
Comments from Facebook about Jenny’s initiative include:
What this proves is that Accidentals are a rather pusillanimous bunch.
We are unable to channel our indignation, rage and fear into something positive.
We feel overwhelmed by the notion of taking on states and wrongly conclude that David cannot beat Goliath. We cling to the hope that hiding is the best solution.
We meekly support those of our members who are willing to take on the fight and defend our common interests.
Nothing will ever change whilst we are stuck in this paradigm. Our domestic authorities will ignore us unless and until we reach critical mass. The US will never do anything for us, they have no reason to. This is why the EU judiciary is our best solution but without passive support in form of funding there is nothing our less timorous members, such as JB Web, can do.
Yes it is shocking that Jude’s petition has been open for YEARS, and very widely publicised with multiple EU Parliament hearings, and it does not cost a penny to sign it, and yet it has still not even reached 1,000 signatures. I can’t understand why people would choose to just complain and mouth off instead of actually DOING something about an atrocious injustice that is harming hundreds of thousands of ordinary individuals and families.
What is it about Americans living outside the USA that they are happy to shoot themselves in their feet? If all 6900 members of American Expatriates gave £10 or equivalent, there is £69000. If we each gave another £10 this grows to nearly £140000! Together we can be strong – otherwise we lie down on a motorway and let speeding juggernauts squash us.
As of today, there are only 453 donors to Jenny’s cause. Those impacted by FATCA just don’t care enough to support the principles at stake. The real story of Jenny’s lawsuit and other initiatives is that Americans either:
1. Don’t think that FATCA and citizenship-based taxation are problems (they are citizens of “The Land Of The Free”); or
2. Don’t have the courage to stand up for themselves (they are citizens of the “Home Of The Brave”).
The longer term implications …
Apparently it hasn’t occurred to governments and administrative agencies, that by upholding the FATCA IGAs, they are really endorsing the right of the United States to impose worldwide taxation on THEIR OWN RESIDENTS. FATCA and all things related to FATCA, are actually about turning all people in the world into US tax subjects.
An inconvenient truth, but a truth nevertheless!
Perhaps Jenny should seek funding from the British public in general …
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Appendix – Jenny’s Description Of Her Objective
What follows is Jenny’s description of her objective. Notice that the approach is NOT that FATCA (and CRS) are wrong per se. Rather the approach is that they go further than is necessary to facilitate the objectives … Her legal claim is based on the GDPR which makes the case very different from the FATCA Canada lawsuit.
https://www.crowdjustice.com/case/fatcahmrcprivacybreach/
Why I am taking HMRC to court and need your help
Hi, I’m Jenny. I am a US-born British citizen. I moved to the UK nearly 20 years ago, when I was 22 years old. I am married and I work with deaf students at the local university where I am a research associate. I have a UK bank account where I receive my salary and pay my taxes on my earnings.
Like many Americans, I have found myself caught up in a piece of legislation called FATCA (Foreign Account Tax Compliance Act). You may not have heard of it before, I hadn’t either until I received a letter from my bank out of the blue saying that I “may have tax obligations in the US” and that the bank was going to send information about me to the Internal Revenue Service (IRS). Under FATCA, banks are required to send all of my personal and financial information – and that of all those like me – to US authorities on an annual basis.
Under FATCA, banks are required to send all of my personal and financial information – and that of all those like me – to US authorities on an annual basis.
I am bringing a claim against HMRC for sharing my personal and financial information with the IRS because:
1. The sharing of all my personal and financial information is a violation of my fundamental human rights to privacy and data protection. My information is irrelevant to the objective of FATCA which is to collect tax from those evading it. I am not liable for tax under FATCA as I earn less than the $104,000 income tax exemption for Americans living abroad.
2. The sharing of my personal and financial information is in direct breach of GDPR.
3. This sharing of my personal and financial information with the US government exposes me and countless others to a potential hack throughout the data processing chain (bank, HMRC, IRS).
4. There is the significant unintended consequence that other US-born British citizens like me are unable to open local bank accounts, or are seeing them be closed down, due to the cost implications on banks of compliance with FATCA.
Nobody should evade tax. My problem is not with FATCA’s objective but the disproportionate nature of the measure to achieve its objective.
(For more information and background on FATCA click here)
Why support this claim
Like me, you believe nobody should evade tax. You recognise that the problem is not with FATCA’s objective but the disproportionate nature of the measure to achieve this objective.
You are:
a US citizen concerned about the direct implications of FATCA in the UK on you – the systematic and generalised processing of your personal and financial information, or;
a US or non-US citizen who is concerned with the growing trend of encroaching on basic human rights to privacy and data protection via systems of automatic exchange of information and public registers operated by governments, often against the advice of data protection authorities.
Sometimes it takes an ordinary person to defend individuals’ fundamental rights when public authorities seek to achieve honourable public objectives through disproportionate means.As I am one individual defending a principle that affects many, I need the support of those who share my concerns.
What we can do with your help
A legal challenge of this type requires an enormous amount of work. It is complicated and untested which means it is hard to predict how it will develop. I have instructed Mishcon de Reya who are leaders in data protection and privacy issues. Dealing with HMRC, without going to Court, is costing several hundred thousand pounds.
I have been advised by my lawyers that because of the novel nature of the case, the costs through to a final conclusion are difficult to predict. I will, of course, share regular updates on how the case is progressing and what stage it has reached together with updates on how much more I need to raise.
In addition to providing me with the necessary funds, your donations will show the amount of public support for this cause. On 10 September, I set myself an initial target of £50,000 to be met within 30 days. The supporters of this case were so generous and enthusiastic that we exceeded this target in just 28 days. Now I am working toward a stretch target of £120,000 to cover the costs of the case work as it progresses toward litigation
The UK is dead. It was violently raped by the US empire. All you have is the US British bitch island. People in America are protesting and rioting. It’s time for Americans abroad to do the same.
On the positive side, the British Navy ought logically to have the right to impress American sailors.
Actually, this demonstrates that Britain is now officially a Colony of the United States. The logical extension of this is that ALL British citizens are actually owned by the United States and should be conscripted into the American military (to do work that Americans shouldn’t be expected to do).
Furthermore, the FATCA IGAs absolutely allow the United States to designate anybody in the world to be a US citizen for tax purposes.
Thank you so much for this post @USCitizenAbroad. It makes me despair for our rights and freedoms as UK citizens. This is a terrible decision in so many ways. The ICO’s mission is ‘promoting openness by public bodies and data privacy for individuals’, and with this decision they are basically doing the opposite of that.
The funding available at the moment is not enough for me to launch an appeal. It is really unfair for only a few hundred people to contribute (some on multiple occasions) while the thousands of others affected by this issue just sit back and watch.
Many thanks to everybody here at Brock who has been generously supporting and promoting the campaign.
@Jenny
At this juncture it is absolutely critical that people support both Jenny’s UK lawsuit and the Canada FATCA IGA lawsuit. They operate in different ways, are based on different legal theories and presumably would have different results.
In all seriousness, people need to understand that the United States is basically annexing both Canada, UK (and other countries).
The ICO have sacrificed anyone the USA claims as a tax payer and their own professional integrity, it’s that or the USA gets very angry indeed.
I agree with UCA, this is steady annexation.
https://www.cips-cepi.ca/2019/09/25/the-remarkable-consistency-of-canadas-foreign-policy/
One can say that extradition,taxation of expats,etc, is a part of US foreign policy, and can be included in the discussion above by the CIPS.The historical facts show the Canada threads very carefully when it comes to our southern neighbor but what the article doesn’t say, is that Canadian
foreign policy strays only to the extent that the US allows it to do so.
I’ve a feeling the HMRC or other relevant authorities in the UK (and gov’ts around the world) will eventually identify their own residents as US citizens (based on parents’ birth place and year of immigration to the UK, Canada, Australia, France, Germany, etc.), send them letters demanding compliance with US tax law, and send their personal information to the US gov’t for processing.
Honesty, is there anything stopping the US from changing its laws and someday imposing its tax code on all former citizens living abroad?
The UK government lacks the basic administrative competence to execute such a scheme.
@Ron Henderson
The question is not their competence level today. The question is what could it be.
@Robin asks:
Many of the existing US tax treaties already include as part of the “saving clause” that the US cam impose tax on former citizens for a period of ten years.
Here is the text of paragraph 4 of Article I of the Model US Tax Treaty:
https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/Treaty-US%20Model-2016.pdf
The Model Tax Treaty is yet one more reason why there needs to be massive opposition to this on the level of individuals …
@Robin comments:
Eventually? Here is what the FATCA IGA currently states about due diligence for new accounts:
Page 27 of the US UK FATCA IGA:
https://home.treasury.gov/system/files/131/FATCA-Agreement-UK-9-12-2012.pdf
The requirement is that account opening documentation must be sufficient to allow the institution to determine whether … The point is that it’s not only a self-certification. The self-certification must include information that allows for the financial institution to make an independent determination of US citizenship. This does logically include questions like:
“Where were your parents born?”
“Are your parents or have they ever been US citizens?”
The real question is not whether this is coming. The real question is whether lying and avoidance is a solution to this problem.
But, meanwhile, with respect to Jenny’s lawsuit:
In the last two days only two more people have contributed …
There is an issue with the expats and accidentals not being organised enough. But the reason for that is that most ex-pats and accidentals do not comply with the IRS and send tax returns to the USA. Most manage to live their lives unaware of the issues. One reason for this is that existing accounts were grandfathered and the people have not been FACTAed by their bank. If half go the 9 million odd citizens abroad were to have problems with their bank, then you would have a strong movement that could achieve something. The reality this is not a problem that most people have.
Bear in mind some people are starting to find work arounds to the banking issue. Different institutions ask different questions when a person applies for an account. For instance some will ask about all citizenships that a person has. Others are only bothered about the most important two citizenships. So if you have three citizenships, then you can simply only tell them about your two non-us citizenships. After all, it is up to you to decided which two are the most important.
But overall, as along as overseas citizens learn to cope and manage their situation, then it is hard to see any progress being made here.
I opened my first UK bank account back in 1986 when I was a US citizen. I kept it going when I emigrated to the UK. I’ve never been approached by said bank about citizenship, so I think they simply had no idea.
@BirdPerson
I was 8 years old when I moved to the UK. I have always said that I was British when applying to bank accounts and the like since it was simpler that trying to explain the concept of multi-nationality. With the introduction of FATCA, that policy has stood me in good stead.
Most expats don’t have have problems since most don”t change banks or open new accounts very often, mine stretches over decades. Also, most people don’t go to a doctor til they are really sick ,which is often too late.
My husband and I were not FATCA’d on either of our main accounts at two different banks, until I had to apply for an emergency personal loan from one bank. This was around 2013 and I was unaware of FATCA. There was a field asking for citizenship and I put USA (we are not dual citizens). It was then that we started getting bombarded with US forms to fill out and letters from that bank saying that henceforth we were “allowed” to maintain our personal bank accounts, but all other products including mortgages and investments were now off-limits. It was then that I started looking into the reasons for this, and then that the calls to compliance condors set off nightmares.
If only we hadn’t desperately needed some short-term cash at that time!
This is the biggest problem in accepting you are a US citizen in front of your local bank overseas that you are US citizen. Many banks, brokerages told me to simply say no if you are dual national living in that country as their superiors from compliance will close the account and say take your money somewhere else. Seriously give me a break. US citizenship is a nightmare on expats. My own doctor who holds three citizenship is scared of his US citizenship as he admitted he never knew that he had to file taxes and report all his accounts while he makes regular trips to US for conferences.
I am not a US person. Yet I feel abused by this decision. I feel chills and a cold sweat as I consider just how dangerous this situation is to all persons and indeed all nations outside the US.
@TomH
Tell your doctor to relax, at least in the short to medium term. At present, US customs & immigration have no access to tax status information. For him to have problems with conference travel, he’d need to be on the IRS radar with attempts already made to collect a debt. That won’t happen if he doesn’t file anything.
@Tom H
Also, did I understand you correctly: you’ve had bank employees suggest that you answer “no” to US citizenship questions, so that you can sneak one past the compliance department? If so, that is an excellent development. Hats off to those bank employees. The more people willing to ignore FATCA, the better.
@Ron Henderson
The more people fail to address these injustices, the more the injustices will continue. Part of the point of the post was to suggest that the small number of supporters for Jenny’s lawsuit makes it easier for governments to ignore these injustices.
There are at least two ways to “ignore FATCA”.
The first way (as you suggest) is to do what you can to not comply. This may include lying to banks, etc. This is a personal decision/solution that may work for a while. In this earlier comment (http://isaacbrocksociety.ca/2020/06/18/uk-government-endorses-right-of-united-states-to-impose-worldwide-taxation-on-uk-residents/comment-page-1/#comment-8813914) I pointed out that once the banks start doing what they are required to do, things will get much more difficult. This response/reaction (by itself) doesn’t provide any opposition to FATCA and citizenship-based taxation.
The second way to ignore FATCA is to not support the people, like Jenny, who are attempting to effect change for a large number of people. (In this comment (http://isaacbrocksociety.ca/2020/06/18/uk-government-endorses-right-of-united-states-to-impose-worldwide-taxation-on-uk-residents/comment-page-1/#comment-8812707) I suggested that lack of opposition makes it easier for the USA to annex countries one at a time.) To not support people like Jenny, may be accompanied by ignoring FATCA through noncompliance. The lack of support for Jenny doesn’t provide any opposition to FATCA and citizenship-based taxation.
Are you happy with the status quo? Are you happy with a world where some people (for example in Canada and to a lesser extent Australia) can lie (for now) their way out of this (leaving those in Europe to deal with the problem)? Are you willing to look the other way while the US picks off one country at a time?
I deal with FACTA through indivdual avoidance and collective action.
I am not a US citizen. As far as my bank knows, I’m an unhypenated Canadian. I also have a CLN, which I can use if it’s absolutely needed. So, I can “avoid FATCA” under the current law. Nevertheless I support anti-FATCA legal/political action because this situation touched my life seriously in 2011, so I know it’s importance. I survived — thanks, Brockers! — but I feel the need to help others by supporting legal action to stop this ridiculous overreach of the US government. Supporting the lawsuit also makes me feel like I’m giving them a good kick in the shins (or elsewhere).
@Pacifica777
And you support others through your incredibly patient, thoughtful and focussed moderation of the Isaac Brock Society. IMHO the Isaac Brock Society has been by far the most important voice in the world of the opposition to US citizenship-based taxation and FATCA. Although often invisible, you have been the “backbone” of that voice. This is also true of other members of the Brock board both past and present.
Please consider this comment to be a public acknowledgement of the incredible work that you have done since 2011. Without your presence, much of what has been accomplished would not have been accomplished.
The IOC apparently accepts that it might not have complied with one (only) aspect of its FATCA “transparency obligations”, but feels that that’s ok:
“The commissioner said: “On the basis of the information we have considered, our view is that HMRC has complied with its data protection obligations in transferring [Jenny’s] personal data to the IRS, with one exception.
“We consider that HMRC may not have fully complied with its [GDPR] Art 14 transparency obligations.”
But the ICO continued: “Although HMRC may not have complied with all of its data protection obligations, having taken into account the circumstances of this case, we do not consider that it is necessary and proportionate to take any further regulatory action.””
From: https://international-adviser.com/hmrc-wins-fatca-case-over-data-confidentiality/
“having taken into account the circumstances of this case”
They have taken circumstances into account that never should have been, this is the pattern we see globally.
Frankly, I give up.