Am I going to get in trouble in the UK or the US over this?

People can be astounded all they like. That doesn't change their obligation to file accurate tax returns when required.

+1

The OP is earning over $12k/year interest on those funds and has filed forms with the Halifax to have that interest paid gross so he has been paying no tax in either country on that. It is hard to argue that he knew enough to avoid paying taxes in the UK but not realize that he should be paying taxes in the US.

People can be astounded all they like. That doesn't change their obligation to file accurate tax returns when required.

It's the CITIZEN BASED TAX system that astounds them.

I understand. But that doesn't affect the OP's obligation to file tax returns in any way whatsoever.

It's the CITIZEN BASED TAX system that astounds them.

I understand, but the OP is currently residing in the USA and hasn't been reporting his interest income from a foreign bank.  That part of the tax law applies to both citizens and residents.

+1

The OP is earning over $12k/year interest on those funds and has filed forms with the Halifax to have that interest paid gross so he has been paying no tax in either country on that. It is hard to argue that he knew enough to avoid paying taxes in the UK but not realize that he should be paying taxes in the US.

Yes, he should have paid taxes to HMRC on these accounts, primarily because they originated in the UK and were likely funded with UK currency, and the interest was in GBP's.  It should be up to the HMRC as to the addressing of his delinquency not paying UK taxes and any penalties that should be due.

Instead he is now looking at something entirely different.  If those accounts had been established overseas by the OP whilst living here in the US and US funds had been put there then he should be taxed by the IRS on the interest, just as if it was in a bank here.  However, it appears that was not the case. The ONLY rule that currently prevails is that the US Dept of the Treasury and the IRS say "because you have an attachment to the USA we get to tax you on any funds and income you hold, anywhere in the world, irrespective of where you actually live and where those funds originated", and if you don't comply and disclose EVERYTHING to the penny in a timely manner we have huge penalties, fines and interest that we are going to bludgeon you with.

As always - MIGHT MAKES RIGHT!!! At least as far as the USA is concerned.

Yes, he should have paid taxes to HMRC on these accounts, primarily because they originated in the UK and were likely funded with UK currency, and the interest was in GBP's.  It should be up to the HMRC as to the addressing of his delinquency not paying UK taxes and any penalties that should be due.

Instead he is now looking at something entirely different.  If those accounts had been established overseas by the OP whilst living here in the US and US funds had been put there then he should be taxed by the IRS on the interest, just as if it was in a bank here.  However, it appears that was not the case. The ONLY rule that currently prevails is that the US Dept of the Treasury and the IRS say "because you have an attachment to the USA we get to tax you on any funds and income you hold, anywhere in the world, irrespective of where you actually live and where those funds originated", and if you don't comply and disclose EVERYTHING to the penny in a timely manner we have huge penalties, fines and interest that we are going to bludgeon you with.

As always - MIGHT MAKES RIGHT!!! At least as far as the USA is concerned.

That is not true.  My UK accounts were created while I lived in the UK and the money in them came and comes from UK sources.  While not resident in the UK you are not required to pay UK taxes on any income generated from them.  The OP was able to file HMRC forms with the Halifax to not pay taxes on the interest, the Halifax will not pay gross interest unless you file those forms.

This is all in accordance with the UK US tax treaty.  You only pay taxes once, but you have to pay taxes.