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Discussion Starter · #1 ·
"Tax administration: regulations to implement the UK's automatic exchange of information agreements"

https://www.gov.uk/government/uploa...76/TIIN_8148_tax_admin_automatic_exchange.pdf

Two statements of particular interest, p.3, Summary of Impacts:

This measure is not expected to impact upon tax compliant individuals, households, or family formation or stability.
Really? Tax-compliant non-US spouses of US citizens may find that their accounts jointly held with their spouse are now reportable to the IRS. Tax-compliant UK-resident USCs may find certain accounts no longer available to them.

There are no impacts on any groups which share a protected characteristic.
Really? US-born non-US-citizens may find their accounts treated as reportable to the IRS. Non-US-born non-US-citizens will not. Discrimination on the basis of national origin falls under the protected characteristic of race. (Of course it's not the same as race, but that's the way it's categorized under UK law.)

Perhaps worth raising with one's M.P.
 

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Does this mean that all UK and non UK persons resident in the UK have to report all foreign financial accounts held overseas to HMRC and
does it mean that US financial institutions are required to report all UK foreign accounts held in the USA to HMRC?
 

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Does this mean that all UK and non UK persons resident in the UK have to report all foreign financial accounts held overseas to HMRC and
does it mean that US financial institutions are required to report all UK foreign accounts held in the USA to HMRC?
The OECD regulations are supposed to require all banks to report accounts held by non-residents to the banking authority (or tax authority) of the account holders' country of residence. FATCA requires that all banks outside the US report accounts held by "US persons" ( i.e. citizens or permanent residents) to the IRS - usually through the national bank or banking authority.

To be honest, the US doesn't actually report non-resident accounts back to the country of residence - and that has been a bone of contention in all this "foreign bank account" stuff for a long time.
Cheers,
Bev
 

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Discussion Starter · #4 ·
Does this mean that all UK and non UK persons resident in the UK have to report all foreign financial accounts held overseas to HMRC and
does it mean that US financial institutions are required to report all UK foreign accounts held in the USA to HMRC?
It's a real headache trying to get this legislative mishmash straight. As I understand it:

The document I quoted from (https://www.gov.uk/government/uploa...76/TIIN_8148_tax_admin_automatic_exchange.pdf) assesses the impact of the FATCA and /DAC-CRS regulations.

The FATCA/CRS/CDOT regulations ( International Tax Compliance Regulations 2015, Statutory Instrument 2015/878 http://www.legislation.gov.uk/uksi/2015/878/pdfs/uksi_20150878_en.pdf) put into effect the measures set out in: (a)the FATCA IGA, (b) the OECD Common Reporting Standard, and (c) the EU DAC (requiring EU member countries to implement CRS)

The FATCA IGA requires UK Financial Institutions to report accounts held by US persons (whether UK-resident or not) to HMRC, and HMRC forwards the reports to the IRS. The US reciprocates by sending some limited information on (some) accounts held by UK residents in the US.

The OECD CRS requires UK Financial Institutions to report accounts held by anyone resident or tax-resident in another jurisdiction to the tax authority in that jurisdiction.

In brief - the FATCA IGA and the OECD CRS are both implemented by the Regulations, and the impact of the Regulations is assessed in the Impact Statement.

The Impact Statement seems to me to have overlooked the impact of the Regulations on some tax-compliant UK resident US cirizens and non-US citizens. That's what I think might be worth drawing to the attention of one's M.P.

-
 

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Discussion Starter · #6 ·
The OECD regulations are supposed to require all banks to report accounts held by non-residents to the banking authority (or tax authority) of the account holders' country of residence.
As I understand it, CRS requires FIs to report accounts to the jurisdiction(s) in which the accountholder is resident for tax purposes. Most people, other than US citizens, are only tax-resident in their country of residence, but as I understand it, it is possible for a non-US-citizen to be tax-resident in more than one country. And definitely possible for non-doms living in the UK and holding UK accounts to be tax-resident elsewhere.
 

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Perhaps worth raising with one's M.P.
I did raise precisely the two points you mention with my MP, over eight separate communications spanning a period from 2 Oct to 17 Nov 2014. He shuttled messages between me and the Exchequer Secretary to the Treasury, but otherwise took no action.

Treasury's response in all cases was merely a variant on "drop dead". Their exact words: "It is a matter for the US as to how they tax US citizens." The argument, as ever, was that it was too expensive not to cave in to FATCA, and the IGA is justifiable because it is the cheaper alternative.
 

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Discussion Starter · #8 ·
I did raise precisely the two points you mention with my MP, over eight separate communications spanning a period from 2 Oct to 17 Nov 2014. He shuttled messages between me and the Exchequer Secretary to the Treasury, but otherwise took no action.

Treasury's response in all cases was merely a variant on "drop dead". Their exact words: "It is a matter for the US as to how they tax US citizens."
That's interesting. Presumably that was in response to the first point - "no impact on the tax-compliant"? It doesn't answer the second point (the impact on a person who is not a US citizen but has a US birthplace). Perhaps they just chose to answer the question they wanted to answer rather than the question that was asked. Typical.

It doesn't necessarily mean writing to one's M.P. is a waste of time, though. They'll probably be keeping track of what issues are raised by constituents, if only to be aware of what might turn up in the courts. Is my guess. And there have been significant changes since 2014, with regard to politics (Osborne gone, Brexit looming, minority government), AEOI (CRS), and data protection.

The argument, as ever, was that it was too expensive not to cave in to FATCA, and the IGA is justifiable because it is the cheaper alternative.
That's an argument I agree with. Naked FATCA would be much worse for all of us than IGA FATCA.
 

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It doesn't answer the second point (the impact on a person who is not a US citizen but has a US birthplace).
Actually anyone with a US birthplace IS (technically, legally) a US citizen, with the one, limited exception of a child born in the US to diplomatic parents. However, the enforcement of tax and FATCA obligations on these "accidental" Americans is pretty limited. As is the enforcement of the whole thing on those born overseas, but with one or both parents able to pass on their US citizenship. It's not an option - though it's much easier to conceal (or just forget about) than the various other ways of becoming a US citizen.
Cheers,
Bev
 

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Those of us who have renounced are not.
And in that case, the banks are still obligated to ask you about your status - and to require you to produce a CLN to "prove" it. So, to a certain extent, those with a US birthplace are still required to comply with FATCA if only to show proof if it doesn't apply to them. (Pretty much the same as the situation of the diplomat's kids.)
Cheers,
Bev
 

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Discussion Starter · #12 ·
And in that case, the banks are still obligated to ask you about your status - and to require you to produce a CLN to "prove" it.
That's not correct. The UK regulations don't require the banks to apply the "cure" for a US birthplace - at least, nowhere that I can see.

So, to a certain extent, those with a US birthplace are still required to comply with FATCA if only to show proof if it doesn't apply to them.
Obviously all accounts are subject to due diligence. The issue is that those with no indicia cannot be required to supply a US TIN and treated as reportable; but those with a US birthplace can, even if they're not a US citizen.
 

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Discussion Starter · #13 · (Edited)
I said:

The issue is that those with no indicia cannot be required to supply a US TIN and treated as reportable; but those with a US birthplace can, even if they're not a US citizen.
Correction - the banks can't actually report the account of a non-US-citizen born in America, because the IGA doesn't give them data protection cover to do that; they can demand the US TIN, and close the account if it's not forthcoming.

That's why the impact statement is interesting. The legislation may or may not infringe on the US-born non-US-citizen's equal rights - that would have to be settled in court - but it certainly does seem to have an impact on a particular group defined by national origin.

It may be that if drawn to the attention of the law writers, the legislation might eventually get adjusted to require the banks to apply the cure. That would be the best solution, IMO.
 

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Discussion Starter · #14 ·
Actually anyone with a US birthplace IS (technically, legally) a US citizen, with the one, limited exception of a child born in the US to diplomatic parents. However, the enforcement of tax and FATCA obligations on these "accidental" Americans is pretty limited. As is the enforcement of the whole thing on those born overseas, but with one or both parents able to pass on their US citizenship. It's not an option - though it's much easier to conceal (or just forget about) than the various other ways of becoming a US citizen.
As far as I'm aware, UK AEOI legislation would not allow a bank to treat an account with no indicia as reportable to the IRS merely because of a parent's US citizenship.

As to whether the child of a USC parent is or is not a US citizen - it's not some essentialist "thou art and ever shalt be" congenital disease that you don't have an option to refuse. Of course you can refuse, children of USC parents, The US can't impose US eternal-tax-paying citizenship on you - you don't have anything to conceal, and don't need to lie.
 

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Discussion Starter · #15 ·
UK Dual Nationality

UK passports issued in 2007 had a note "Dual Nationality", which stated, in part:
British nationals who are also nationals of another country cannot be protected by HM's representatives against the authorities of that country. If, under the law of that country, they are liable for any obligation (such as military service), the fact that they are British nationals does not exempt them from it.
In UK passports issued in 2017, the notes have been rewritten. Note 3 is labelled "Consular Assistance", and states:
A British citizen who holds dual citizenship (also known as dual nationality) cannot get diplomatic help from the British government while they are in the other country where they hold citizenship. A person who has dual nationality may be subject to the laws of the other country. It is your responsibility to determine what responsibilities you may have with that other country.
I'd be interested to know when the wording was changed.
 

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I don't see anything like that in my current (soon to expire) US passport, but I can assure you that there was a very similar sign posted prominently in the US Consulate in Paris the last time I was in there (which has to be almost 20 years ago now - well before FATCA was even an evil twinkle in a politician's eye). I believe it is a long-standing "rule" that no consulate can do much of anything for a dual national in one of their "home" countries.
Cheers,
Bev
 

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Discussion Starter · #17 ·
I don't see anything like that in my current (soon to expire) US passport, but I can assure you that there was a very similar sign posted prominently in the US Consulate in Paris the last time I was in there (which has to be almost 20 years ago now - well before FATCA was even an evil twinkle in a politician's eye). I believe it is a long-standing "rule" that no consulate can do much of anything for a dual national in one of their "home" countries.
Cheers,
Bev
Bev, my question is about UK passports, not US passports.
 

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Discussion Starter · #18 ·
For what it's worth, for a US citizen residing in the US or the UK, the question of consular assistance with regard to FATCA does not arise.

If resident in the US, the person is subject to US law, regardless of nationality; if resident in the UK, the person is subject to UK law, regardless of nationality. Since FATCA rules are law in both countries, a US citizen has no recourse to diplomatic protection with regard to FATCA. Q.E.D.

It's not the consular assistance aspect that's of interest to me; it's the final sentence of the rewritten UK passport note:
It is your responsibility to determine what responsibilities you have with that other country.
As HMG appear to have handed that responsibility to the banks, without sufficient safeguards for the rights of the individual concerned.

For example, in the case of a pre-existing account held by a US-born individual, banks are free to report the account, or seek self-certification and act accordingly, or close the account; in the case of a US-born individual seeking to open an account, banks are free to refuse, or seek self-certification and act accordingly.

Whereas, taking the sentence from the passport notes at face value, it appears to me it could perhaps be argued that a US-born person who satisfies the conditions for relinquishment of US citizenship, and considers herself to have relinquished US citizenship, is entitled to answer "no" to the question "Are you a US citizen", without being forced to buy a CLN.

Of course I'm not a lawyer and may very well be wrong. We'll see. It would be helpful to know when the sentence first appeared in the UK passport, if any UK passport holders are reading.
 

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Bev, my question is about UK passports, not US passports.
Yes, but my initial reaction was that I have seen this exact statement with regard to US citizens somewhere - and checked my passport first. It's pretty much standard policy at most consulates these days, I believe.
Cheers,
Bev
 

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Discussion Starter · #20 ·
Yes, but my initial reaction was that I have seen this exact statement with regard to US citizens somewhere - and checked my passport first. It's pretty much standard policy at most consulates these days, I believe.
Cheers,
Bev
Could you please clarify that? Do you mean that you've seen a statement saying:
A US citizen who holds dual citizenship (also known as dual nationality) cannot get diplomatic help from the US government while they are in the other country where they hold citizenship. A person who has dual nationality may be subject to the laws of the other country. It is your responsibility to determine what responsibilities you may have with that other country.
...including that final sentence? That would be a little weird, since using the same exact wording would imply that the US and the UK agreed the wording.

Or do you just mean that you've seen statements in US passports/consulates about dual citizens not being entitled to US consular assistance against the other country of citizenship?

That fact is not in doubt, as I've said. It's the final sentence of the UK passport note I'm interested in.
 
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