I emailed NSandI about opening a savings account when I (dual UK/US) and my wife (USC) move to the UK later this year. Here was the reply:
"If you both are going to be UK citizens for tax purposes, then you would
be able to apply for a joint account when you move back the the UK.
Regrettably if this changed you wouldn't be able to hold the investment
as we cannot accept any investment from US residents."
This was not specifically about pensioner bonds, but I thought it might be helpful. Seems that resident for UK tax purposes is the key.
Thank you for that information, sdt99. That agrees with the response we had (as noted in the link in the 2nd post -
http://talk.uk-yankee.com/index.php?topic=83129.0 ) on a question raised concerning
Direct Saver accounts with NS&I. Again, there the wording was "(a) opened by a person who is either a US citizen and/or a US resident for tax purposes;".
There are two possibilities that may be considered:
1) NS&I may be listed as a
'deemed compliant, local client base' FFI under the IGA, in which case they are obliged to offer accounts to US Persons resident in the UK; who file a tax return in the UK; and who have a bank account in the UK.
2) NS&I may still be unaware of the confusing wording on their Terms and Conditions, regardless of all those who have pointed out (to them) what they probably intend is, as you say, a UK interpretation of resident for tax purposes.
There is a copy of alleged correspondence on another forum from NS&I to a UK MP who raised the issue at the behest of a (US Person) constituent. There is no way to verify if it is an actual, true correspondence. Being an open forum on the internet, it could be fabricated.
27 Oct 2014
Thank you for your letter of 5 June enclosing correspondence from … about NS&I’s policy in respect of the Foreign Account Tax Compliance Act (FATCA). I am very sorry for the delay in replying.
FATCA and the UK International Tax Compliance (United States of America) Regulations 2013 create obligations to identify and report upon US tax payers. In doing so, they require financial institutions to report any accounts held with them by customers who are tax-resident in the United States (whether they are Citizens, Nationals or have tax residency status). These requirements are additional to NS&I’s current and previous due diligence processes.
NS&I has one purpose, to raise cost effective debt financing on behalf or Her Majesty’s Government. The current systems do not allow for reporting to foreign jurisdictions, and NS&I has had to consider carefully whether the additional administrative activity required by FATCA and the Regulations would run contrary to the best use of taxpayers’ money. Tax reporting to foreign jurisdictions is a relatively recent development and was not foreseen in the design of our systems and processes.
.........
During negotiations with the IRS, it was agreed that existing NS&I accounts that would become subject to FACTA reporting requirements would be closed and the amounts owing repaid to customers to reduce the administrative burden on NS&I. Taking the situation as a whole (including the likelihood of wider reporting requirements in future for foreign tax-resident customers), NS&I concluded that this was the most appropriate course to ensure that its administrative costs remain within proportionate and acceptable bounds.
.........
Regrettably, NS&I is not able to meet the identification and reporting requirements that FATCA presents and recognises that this approach is disappointing for some; but hopes that this letter will serve to clarify its position and provide some context as to why it was chosen.
Again, there is no way to verify if the above is in fact alleged actual NS&I correspondence. We do know from the media NS&I closed the accounts many US based customers.
If the alleged correspondence is to be believed, NS&I are concerned about:
In doing so, they require financial institutions to report any accounts held with them by customers who are tax-resident in the United States.
A lot of reading between the lines, but it seems NS&I still do not understand the consequences of their wording, and the intent is to close accounts of those resident
in the US.
Nonetheless, the alleged correspondence conveys a strong sense that NS&I do not want anything to do with any FATCA compliance. If UK based US persons do not require this compliance (via the IGA), or
"identification and reporting", then NS&I may be content to have them as account holders.
Alas, we don't and won't know on a product by product basis exactly how NS&I interprets
"US resident for tax purposes" until NS&I respond to current inquiries concerning this particular product. For clarification, NS&I offers some products which do not contain either the
citizenship or resident language and are supposedly available to US persons.
