FATCA and the United Kingdom

133 thoughts on “FATCA and the United Kingdom”

1. @Ginny
   Boris did state that he had settled his tax probs with the US, so the financial pain would have been already dealt with. As a dual from birth, who had lived most of his life in the UK, he would be excused the 8854 assessment for an exit tax. That is what I meant when I said that now there would be no financial pain to renounce.

2. PS. @Ginny
   I agreed with JC only in the respect that Boris may retain some of his ‘Outrage’ against the US, but if he continues to be a US person, I believe his hands would be tied.

3. @CG

   Silly-willy Boris renewed his US passport in 2012, apparently.

   http://www.bbc.com/news/blogs-magazine-monitor-27371673

4. @Bublebustin. That is at least five years for Boris’ passport. I thought he was kind of forced at the time separated from his family on an overseas trip going through the US.

   Hopefully he will be provoked into encore performances of “Outrageous” while forced to comment on US compliance.

   I am thinking that the UK might have just won the global currency wars. The GBP went down quite a bit against the Euro, I would have thought that it might have been the other way around.

5. @ JC
   Not sure what you mean about winning the currency wars. The value of the pound is dropping dramatically against all major currencies, making everything the brits buy abroad more expensive, it would make their exports cheaper and so could boost trade, but they don’t export much anymore, they have become a service industry, banking etc and not sure they can hold onto that now.
   With a British passport one could live, work and get reciprocal healthcare anywhere in the EU, that will now change and a Brit will have to get a visa to work abroad, unless they join EFTA, European free trade association, (like Switz and Norway) but to do this they would have to sign up to free movement of people and that is the reason most voted leave , to stop immigration from the EU.
   Silly Billy Boris, didn’t have to get an American passport, he probably could have claimed a back dated relinquishment based on his Gov employment. It may have even saved him the tax consequences. I think he didn’t bother to get advice.

6. Yes, Heidi, he probably could have played it that way had he been aware of the rules.

   I seem to recall however that the verbally renounced his citizenship at the airline gate sometime after taking office – something not necessary if he’d already relinquished, lol.

7. Rules too complex even for Eton Educated PM Material Boris Johnson! The IRS needs that Tax Payer Bill of Rights amendment: Right to simple easily understood tax system.

   Currency Wars. It has been said since the GFC that certain countries have been engaging in a “war” – kind of an unofficial undeclared war – to lower their currency below that of others to try and gain advantage in international trade and boost the economy of a nation. Also trying to spark inflation and avoid deflation. Lowering interest rates and quantitative easing are two means to lower one’s currency. A problem is multiple countries trying to do it at the same time then the efforts cancel each other out.

   Maybe now England has finally won the currency wars. Lower currency will be stimulative and what Greece can not benefit from as it is tethered to the Euro. We will see what happens in coming months. On the first day the stock markets of Europe went down twice as much as in England. I think Brexit will be good for England over coming years (bad for EU).

8. @JC
   Then why is the bank of England desperately doing QA to support the pound?
   If the UK does not join EFTA it cannot trade with the EU without tarrifs.EFTA requires free movement of people, ( like Swisz and Norway) but the majority of Brits voted Brexit because they wanted to control immigration.
   The US has made its people financial prisoners and now Brits will be physical prisoners.

9. It becomes interesting where the devaluation of the Pound is lower than the EU tariffs. EU tariffs in perhaps 2 years when Brexit happens. Tariffs may hurt the EU by making prices higher for them. In the meantime, the UK does better with all other markets outside the EU.

10. @JC
    Financially….We shall see.We will have to agree to differ.
    My concern is the once liberal minded UK is becoming an increasingly xenophbic place to be. It is building a wall around itself. If the xenophobes who voted for Brexit do not join efta it will not only affect the EU citizens who live in the UK, but the 1.5 million Brits who live
    abroad many of who were denied a vote. Without reciprocal healthcare which also efta provides to the pensioners, they will be forced to sell up and return. Any young Brit applying for a job in the EU will have to get a visa, effectively putting him at the bottom of the pile.
    This affects more than the financial markets. It cuts through the very liberties at the heart of what Brittian once stood for.
    Polly was right, it will tie US closer to five eyes.

11. PS @JC
    What happens when Joe average can’t afford a plane ticket to visit his family in Australia with his devalued pound…..he is effectively imprisioned, I fear that could be a formula for more civil unrest.

12. People from Australia and other countries will more likely visit England with a lower Pound. I believe that EU law was crimping the relationship between England and Commonwealth Nations.

    A model relationship suggested is that of Norway and Switzerland and the EU. These nations are prospering outside of the EU.

13. @JC.Yes, but Switz and Norway and Iceland are members of EFTA, European free trade Assoc, and to be a member the UK would have to agree to the free movement of EU people to live and work, something that Mr Farage and it seems the voting public rejects. Immigration was the word most quoted when they were asked why vote leave
    Most EU citizens who live and work in the UK integrate well, speak English and work hard. Polish plumbers have a reputation for being the best in the trade and at a reasonable price. I think the vote was really against those non EU immigrants who don’t integrate, but that point was not made clear, that non EU immigration can and is controlled by quotas depending on skills.
    Try telling people who have worked hard all their life that they can no longer visit a grandchild in New Zealand as their pension is no longer worth anything.That’s a third rate country.

14. @JC
    I’m with Heidi on this. I asked a colleague who knows way more than I do whether Britain was deliberately trashing the value of the pound as some sort of a currency war strategy and he said, no, it was not a deliberate act, just incompetence. We are already starting to import inflation at the gas/petrol pump. Among U.S. foreign policy experts, there is a pretty clear consensus that a weakened and isolated U.K. will be more dependent on the U.S. and less useful to it at the same time.

    @Heidi
    Well, some of it was unhappiness with E.U. immigration, particularly in the East of the country, but settled non-E.U. immigrants present some major problems. Emigration to the U.K. for work has long required a mix of skill and earnings potential, but marriage or study at bogus educational institutions were easy routes in that have only been shut down in recent years. Before it joined the E.E.C., the U.K. let in low-skilled immigrants from its former colonies and some have continued to go back to the old country for non-English speaking husbands and wives instead of marrying British-born people from their own ethnicity. For the last few years, a Briton had to earn at least 18,000 pounds (about 24,000 USD at the moment) to import a spouse from a non-E.U. country, which should reduce the problem. This should stem the problem, but there are a lot of settled low-skill immigrants. Another problem is that white working class boys have the worst educational results of any group, much lower than the ethnic minorities.

    I hope I am wrong about this, but I suspect that the U.S. passport for Boris is a parachute if it all goes horribly wrong for him in the U.K.

15. @publius
    Yes, it runs deep, as a Brit born and educated (back in the 60’s,) I remember Harold Wilson’s legacy. But I have every respect for the EU immigrants I have met, in Switzerland who seem to work hard to achieve a better standard of living for their families.
    I had not thought about that angle re Boris.!
    Certainly he will experience an uphill struggle for theleadership and hopefully the US citizenship will be brought up and perceived as a problem.

16. Trying to make sense of it all? Interview with views worth a listen (IMO):
    BREXIT (analogy to what is *slavery*, US / British democracy????)

17. A report here that Boris never renounced:

    https://heatst.com/politics/boris-johnson-remains-an-american-citizen/

18. I renounced in October 2015, received CLN 2016. Just opened a new current account with one of the Big Five – no problems, no W8-BEN.

19. Rights under the DPA – finding out if your account has been reported, getting a copy of what information was sent, claiming compensation for any errors:

    http://www.hmrc.gov.uk/budget-updates/march2012/draft-dpa-fatca-faqs.pdf

20. @iota
    W8-BEN should only be used if you have any US sourced income.
    It would be interesting to know if they ask you to sign if/when you have any US Pension or SS payments arrive in that new account. That’s what happened here in Switzerland.

21. Heidi – yes, W8-BEN is used by the IRS for self-certification of non-US-citizenship, to claim treaty benefits on the taxation of US-source income. It’s also sent out with FATCA letters, by some UK banks, to serve as the self-certification document. Fortunately, the bank I’ve just opened an account with sent a form of their own design, meaning I wasn’t asked to sign an IRS form complete with their wretched jurat. Which I would have had to refuse to sign.

    As it was just a normal bank form I was able to sign, and the bank have since confirmed that it’s all in order and the case has been closed. So all’s well.

22. @heidi, iota

    My mainstream UK bank asked me for a W-8BEN even though I have only ever held a basic current bank account with them, and have no US source income. I had a US address on the account eight years ago, and apparently this was enough for them. On querying it with them, they relented, stating that there had been a ‘change in rules’ from ten years back to three and I could ignore the request, so I never actually had to complete it. It seems I would have, though, had my US connection been a touch more recent.

    I don’t recall seeing anything in the FATCA IGAs about going back any number of years when searching for US ‘indicia’ (the address one is explicitly “current” address), so the bank seems to be going above and beyond here. It appears that FATCA and FATCA IGA enforcement will be arbitrary and unpredictable at non-UK banks.

23. @Watcher – I wonder if the use of the W8-BEN rather than a normal in-house form, might be related to how much US business a bank is involved in. The bank I’ve just opened this account with is more Europe-focussed.

    I agree it’s arbitrary and unpredictable. Some banks definitely seem more scared than others.

24. The IRS FAQ at https://www.irs.gov/businesses/corporations/frequently-asked-questions-faqs-fatca-compliance-legal#GeneralQ8 says:

    Substitute Withholding Certificate: Non-IRS Form for Individuals
    A similar agreed form may also include a non-IRS form used in place of a Form W-8BEN (for individuals). The substitute form must include the information required in Treas. Reg. § 1471-3(c)(6)(v), and the form must be signed, dated, and also certified under penalties of perjury unless the form is accompanied by documentary evidence that supports the individual’s claim of foreign status. For a case in which a withholding certificate is required to be associated with a payment subject to chapter 3 withholding or reportable amount under Treas. Reg. § 1.1441-1(e)(3)(vi), however, see the requirements for a beneficial owner withholding certificate under Treas. Reg. § 1.1441-1(e)(2).

    Which is all very well, and may provide a useful reference to show a bank in support of one’s refusal to sign a W8-BEN, but the bank can still just refuse to open the account, as far as I can see.

25. @iota

    This was First Direct. They are a division of HSBC, formerly on the receiving end of a bunch of US treasury, um…, actions. I am sure they are running scared.

    Interestingly, their initial communication said nothing about which US ‘indicia’ they had found, just a vague statement of possible US connection and please would I complete either W-9 or W-8BEN (with certified passport copy and so on). It was only on querying that they explained what triggered this, and then backed off. I later found that an acquaintance in pretty much the same situation as me (seven years out rather than eight) had got the same letter from the same bank and just complied, sending W-8BEN (with its wretched jurat intact) and associated stuff, at some expense.