Study to show how much the UK loses in taxes due to US tax demands

I recently tweeted Boris Johnson about this, as he was until 2016, a US citizen and was caught up in owing taxes to the IRS. I don't expect a tweet back though!

I asked him if a study could be done that could show much tax revenue the UK loses due to US citizens/dual citizens having to comply with US tax demands.

I think this would be a good idea. It would then perhaps make it more likely that the UK would actually stand up and voice their objection to this policy?

What do others think?

I don't see why HMRC would lose much, if any, money due to the US Citizenship based taxation law. For a USC tax resident in the UK HMRC gets to tax worldwide income first, then the US taxes it and the taxpayer reduces his US taxes using tax credits based on what was paid to HMRC.

I don't see why HMRC would lose much, if any, money due to the US Citizenship based taxation law. For a USC tax resident in the UK HMRC gets to tax worldwide income first, then the US taxes it and the taxpayer reduces his US taxes using tax credits based on what was paid to HMRC.

Oh, I thought Californiaguy talking about the administrative costs of all the reporting that the UK has to do to/for the US?

I don't see why HMRC would lose much, if any, money due to the US Citizenship based taxation law. For a USC tax resident in the UK HMRC gets to tax worldwide income first, then the US taxes it and the taxpayer reduces his US taxes using tax credits based on what was paid to HMRC.

Not necessarily. In the case of Boris Johnson, he had to pay capital gains taxes on the sale of his home to the US, even though none was due to the UK. I'm sure there must be other scenarios as well like this with other sorts of investments? Would be beneficial if this could be officially estimated by HMG.

In addition, in the case of the US citizens married to a UK one, the benefits of filling your taxes married jointly are usually greater than filling separately. However, the UK government could argue that the internal financial matter of a UK citizen are not the concern of another state and they have no right to that information.

Oh, I thought Californiaguy talking about the administrative costs of all the reporting that the UK has to do to/for the US?

That too, all aspects of it should be calculated.

I agree with durhamlad.

IMO, the question should be how much does the UK economy and benefit system suffer as a result of US CBT.

The UK has established a tax system based on how it wishes its residents to prosper. For example, in order to aid the senior and their retirement funds, a capital gain is not assessed on the sale of a personal property if the senior decides to downsize. This allows the senior more funds once they are retired, and may keep that senior from having to rely on the benefits system to support them. If the senior is also a US Person, they may have to pay capital gains on the sale to the US, thereby reducing the amount of funds the senior has to support an independent retirement and possibly, eventually, becoming a drain on the benefit system.

There are many more examples.

On the other hand, the costs for UK banks to institute FATCA requirements might be considered a collective loss to the UK Treasury since the UK banks may write off the significant costs (in the £billions) against their UK tax liability.

Cross post with Californiaguy and larrabee.

As theOAP says I think the loss to HMRC due to FATCA is complex. The example of Boris Johnson having to pay CGT on the sale of his home did not result in a direct loss to HMRC since he did not owe any tax to HMRC on the sale of that house but the significant taxes he paid to the IRS is now gone out of the UK economy, it is not going to produce taxable income and he is not going to spend it and pay VAT.

It is interesting that the government run NS&I has said that complying with FATCA is not a good use of taxpayer money so they simply ban USCs from buying their bonds.

What about the transition tax and GILTI. Surely US/UK dual citizens who own UK businesses will sending quite a bit to the US due to undistributed gains they are holding in their businesses.

What about the transition tax and GILTI. Surely US/UK dual citizens who own UK businesses will sending quite a bit to the US due to undistributed gains they are holding in their businesses.

Definitely.  Again it is not a direct loss to HMRC who first receive any business tax owed, but it is more money leaving the UK economy to flow into the IRS coffers.

What about the transition tax and GILTI. Surely US/UK dual citizens who own UK businesses will sending quite a bit to the US due to undistributed gains they are holding in their businesses.

It's an abomination. How the UK or any other country can stand by and see what may be the entire retirement savings of the UK resident individual business owner be handed over to the IRS because the US have decided to deem historic funds as now immediately (or within 8 years) taxable is unbelievable.

Imagine the unsuspecting accidental American. Become compliant (even if to renounce) and hand over all your savings, and then be forced to close your business after paying all the UK tax due on the withdrawn funds. Brilliant. 

We would rather give bonuses and payrises than leave any profit in the business at the end of 2018. If any profit is left in the business it will be taxed by the IRS due to GILTI, payment due on our personal US tax return at our marginal rate and no FTC allowed. Double taxation on business profits would be covered by the tax treaty but by moving the liability to the individual  the IRS gets rounds this. So we will be taxed twice once by the IRS on the deemed distribution and then by the UK on salary/dividends when that income is actually distributed.