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FATCA legal challenge

FATCA legal challenge

Old Nov 26th 2021, 1:54 am
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Default FATCA legal challenge

Not sure if this link will work: https://amp.ft.com/content/77db28e8-...7-dc32813afdd5


A (now former) US citizen who moved to the UK has filed a case before the High Court in London challenging the sharing of data between UK and US tax authorities ie FATCA. If she wins (I can’t see that happening) then surely this applies not just to US citizens/LPRs living in the UK, but also to those living in US with bank accounts in UK
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Old Nov 26th 2021, 3:32 pm
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Default Re: FATCA legal challenge

I hope she wins, but it will make no difference to us as we never hit the FATCA reporting limits. (USCs living in the UK). Citizenship based taxation is the big issue for us. (The article is behind a paywall for me so can’t read any details.)
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Old Nov 26th 2021, 3:43 pm
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Default Re: FATCA legal challenge

Ok. I don't have a subscription to the FT (but enjoy reading the occasional FT Weekend paper). Try googling 'FT Taxpayer in court challenge to UK-US data pact, if you are interested
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Old Nov 26th 2021, 3:48 pm
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Default Re: FATCA legal challenge

Not sure it makes any difference either way. Even if she won the case (which has zero chance) it does not change the law that you must report foreign accounts and pay tax. The draconian penalties attached to breaking it can be financially crippling. That ought to be deterrent enough for anyone insane enough to attempt to hide foreign accounts.
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Old Nov 26th 2021, 5:02 pm
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Default Re: FATCA legal challenge

I agree it has approaching zero chance, and agree it will not change US taxation. But, theoretically, if she wins on a privacy claim or similar, wouldn’t it stop the requirement for UK financial institutions to have to report data to the US authorities? Laws change, via the courts, they are not set in stone for all time. I am thinking purely theoretically,

I don’t think things will change, and everyone should absolutely be reporting foreign accounts
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Old Nov 26th 2021, 6:28 pm
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Default Re: FATCA legal challenge

Originally Posted by newadventure View Post
I agree it has approaching zero chance, and agree it will not change US taxation. But, theoretically, if she wins on a privacy claim or similar, wouldn’t it stop the requirement for UK financial institutions to have to report data to the US authorities? Laws change, via the courts, they are not set in stone for all time. I am thinking purely theoretically,

I don’t think things will change, and everyone should absolutely be reporting foreign accounts
You are right, if banks didn’t have to comply with FATCA it would make things easier as more of them would not bar US customers. For example, Vanguard has almost identical ETF equivalents on their .uk site so I contacted them to see if they reported into the IRS to avoid them being PFICs, but Vanguard.co.uk does not even allow US customers. (It is easier and cheaper to comply with FATCA that way, even for US companies operating overseas)
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Old Nov 26th 2021, 9:18 pm
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Default Re: FATCA legal challenge

Originally Posted by newadventure View Post
I agree it has approaching zero chance, and agree it will not change US taxation. But, theoretically, if she wins on a privacy claim or similar, wouldn’t it stop the requirement for UK financial institutions to have to report data to the US authorities? Laws change, via the courts, they are not set in stone for all time. I am thinking purely theoretically,

I don’t think things will change, and everyone should absolutely be reporting foreign accounts
The US likely won’t recognize or comply with a win in a UK court. Even if she wins the US could still sanction institutions that won’t comply with their requirements.

And if the US and UK have conflicting rules I guess they can have customers agree to voluntary reporting as part of the customer agreement or they will have to stop taking US citizen customers, neither would solve the issue.



It seems strange to go after the UK institution reporting requirements. They won’t change the individuals own obligations for either reporting or tax.
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Old Nov 26th 2021, 11:31 pm
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Default Re: FATCA legal challenge

Originally Posted by newadventure View Post
Not sure if this link will work: https://amp.ft.com/content/77db28e8-...7-dc32813afdd5


A (now former) US citizen who moved to the UK has filed a case before the High Court in London challenging the sharing of data between UK and US tax authorities ie FATCA. If she wins (I can’t see that happening) then surely this applies not just to US citizens/LPRs living in the UK, but also to those living in US with bank accounts in UK
FT is behind a pay-wall. That said, I recall the law suit you mention having been filed 2 or 3 years ago. Have no idea what result, if any.

From what I recall reading is that the issue is raised most often in the cases of what are called “accidental citizens” who have no standing connection with the US. For example, I have a former sister-in-law who is a UK citizen who as born in the US when her father was seconded to North American aircraft on the later abandoned “Skybolt” middle. Although they are Australian, the actresses Cate Blanchett and Nicole Kidman were US citizens at birth.

My understanding is that the essence of the objection pertains to people not resident in the US. It is quite different when an institution deals with persons they know to be resident in the US.
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Old Nov 27th 2021, 12:49 am
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Default Re: FATCA legal challenge

Originally Posted by durham_lad View Post
You are right, if banks didn’t have to comply with FATCA it would make things easier as more of them would not bar US customers. For example, Vanguard has almost identical ETF equivalents on their .uk site so I contacted them to see if they reported into the IRS to avoid them being PFICs, but Vanguard.co.uk does not even allow US customers. (It is easier and cheaper to comply with FATCA that way, even for US companies operating overseas)
Some banks in Canada wont deal with US persons for accounts who don't have $$$ to keep in the bank to make it worthwhile, I was kicked out of 2 of the charter banks in Canada because they didn't feel having to deal with the US on their end was worth having me as a customer.

Credit unions don't care, don't even ask if your a US person, but they tend to operate solely within Canada and only regionally and out of reach of the US.

Upside to being low income, don't have to fuss with any of this, I just send off the taxt return to the IRS so other than $15-$20 in courier fees, its not too bad for me.
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Old Nov 27th 2021, 2:32 am
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Default Re: FATCA legal challenge

Originally Posted by S Folinsky View Post
From what I recall reading is that the issue is raised most often in the cases of what are called “accidental citizens” who have no standing connection with the US.

My understanding is that the essence of the objection pertains to people not resident in the US. It is quite different when an institution deals with persons they know to be resident in the US.
The woman bringing the case was not an accidental citizen, she was born and raised in the US, then moved to UK and got married. Part of her objection was being unable to open bank accounts in the UK because they didn’t want the hassle of the FATCA reporting. But the reporting requirement is due to the citizenship not the place of residency. Her solution was to renounce her US citizenship
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