Thousands of UK Bank Accounts at Risk for US-Born British Citizens

Thousands of US-born British citizens who left their home country as children risk having their bank accounts frozen.

Banks in the UK have faced increasing pressure from the US tax authorities to provide them with information that US-born citizens living in the UK don’t actually have, or even know about.

Many British citizens who were born in the US, but left when they were only a few months or years old, had assumed that their citizenship had rescinded.

One such person was a 74-year-old pensioner from Cambridge who spoke to The Guardian. She explained that she had been sent a series of letters from Barclays asking for her US tax identification details. This is all despite her having left the US in 1947 when she was only 18 months old.

The pensioner, who wished not to be named, said “I felt hounded…I didn’t understand US tax law.”

Tens of thousands of Britons are facing the same issue, with banks chasing them and pressuring them to provide them with their US tax identification numbers.

The banks claim that a failure to provide such information would result in them having their assets in the UK frozen. Many of the people being targeted haven’t lived in the US for decades, let alone worked there.

British banks are dogging their US-born customers as they are fearful of large fines that they could incur from the US regulators. Banks are forbidden from serving US citizens without sharing information with the country’s tax authority, the Internal Revenue Service (IRS).

In accordance with the Foreign Account Tax Compliance Act (FATCA) of 2010, all UK banks (along with any other foreign financial institution) need to report information regarding US taxpayers to the IRS. UK banks currently do this via HMRC.

There has been a grace period for banks and investment platforms, which will expire at the end of 2019 - hence the sudden push for banks to unearth any information they have regarding US nationals on their books.

Thousands of people who were born in the US are likely to find themselves in a sticky situation, as they left the country far too young to have known about the tax rules.

In fact, any of those citizens born before 1986 would not even have been allocated a tax identification number, or even warned that they would be forever liable for US taxation even if they left.

Besides Eritrea, the US is the only country that taxes its citizens on their global income regardless of their resident status.

Estimates by the European Banking Federation put the number of EU citizens affected at around 300,000. Although it is unclear how many Britons are affected, it is thought that the numbers are similar to France, where around 40,000 people are ‘accidental Americans’.

People have been reaching out to Prime Minister Boris Johnson for help with the situation. Johnson, who had his own issues with the IRS back in 2014, was born in New York but left when he was five years old. He renounced his US citizenship when the IRS tried to tax him on the sale of his Islington home - a situation he described as being ‘absolutely outrageous’.