HMRC letter regarding savings account

leonc888

Hi,

My partners mother just received a letter from the bank (YBS) with an information request.

It mentioned she is identified as a non-uk resident but she has been living in this country since the 60's but was born in US, she still has a US passport but her whole life and currently still works here and pay NI and tax etc like normal with the rest of us.

She called the bank which sent this and asked why after a lifetime of being with same bank this has come up and what she needs to do and they said she needs to call US and get her tax ID but this tax ID does not exist and the guy on phone said they can't do anything else.

Could someone help me out here?

it regarding HMRC with Yorkshire building society and her Savings account as that's all she has with that bank.

colsten

There is something about US citizens, regardless of where in the world they live, having to declare their worldwide income to US authorities. Been introduced as a result of the 9-11 attack and homeland security legislation.

The US also hold any non-US banks responsible for enforcing the US laws (not sure on what legal basis but all banks seem to be suitably intimidated and wish to comply). Due to the complications, many non-US banks now simply refuse to offer a US citizen an account.

I am sure with a bit of googling your partner's mum will find out more about her rights and obligations.

Can you also clarify, did the letter come from YBS (Yorkshire Building Society) as your text says, or from Yorkshire Bank (as you say it is from a bank), or from the HMRC (as the title of your thread says)?

leonc888

Thanks for the information, the letter is mentioning HMRC changes by the looks and basically 4 questions which are

1. is the hold a us citizen (she has a US passport and a permanant UK stamp in it) she has not address in us or tax ID from US

2. confirm holders birthplace and a copy of passport or ID card (only US passport) But this question is for people in other countries which is to be left blank.

3. I certify I am not a US citizen or US resident for tax purposes. (encloase passport/ ID of non us country)

4. I agree all above is correct SIGN HERE


really not sure who she could even contact for help on this?


Thanks

oldtoolie

All US citizens are required to file an annual income tax form if their income is above a very low level. In recent years, the US government has been trying to crack down on tax evaders. New laws require all foreign financial institutions doing business in the USA to report their business with US citizens. Many of these institutions have registered with the HMRC which hands the details over to the US Internal Revenue.

However, there are many (million?) US expats who have not filed in many years. It is possible to take advantage of an amnesty scheme and file for the past three years. Unless you have a very large income you are unlikely to owe US taxes.

There is loads of information about this on the web and quite a few online tax preparers who will fill out the forms for a fee. But if you have a simple financial setup, it is not too difficult.

Here is a start http://www.bogleheads.org/wiki/Taxation_as_a_US_person_living_abroad

colsten

Sounds she is a US citizen, so she will have to declare just that, and she'll be subject to whatever the US rules are on bank deposits. There is, however, a US/UK Double Taxation Agreement that should ensure that she doesn't have to pay more tax in any one of the two countries.

Might be easier for you partner's mother to become naturalised if she intends to remain in the UK. That costs about £1,200, and takes about 6-12 months, and it of course subject to UK authorities approving the naturalisation application.

leonc888

Thanks for the info, How would she get her US tax ID? she was only born in US so only has been able to have a passport and she also does not want to got he route of paying a fortune to get a british passport

bowlhead99

leonc888 wrote: »

Thanks for the information, the letter is mentioning HMRC changes by the looks and basically 4 questions which are

1. is the hold a us citizen (she has a US passport and a permanant UK stamp in it) she has not address in us or tax ID from US

Is the account holder a U.S. citizen? She must know if she is or not. If she was born there and they keep renewing her passport, I'm guessing she is. So, if the answer is yes, answer yes. If you don't have a U.S.address or us social security number, don't supply one. Most people banking with YBS will not have U.S.addresses whether they are U.S. citizens or not. From what you've written, they didn't actually ask for an address or tax number here? If the account is in scope for reporting to HMRC at the end of the year, they will simply report date of birth if they don't have a tax ID.

2. confirm holders birthplace and a copy of passport or ID card (only US passport) But this question is for people in other countries which is to be left blank.

So if it is definitely just for people in other countries and is to be left blank, leave it blank. She's already told them she's a us citizen in Q1, and she wasn't born in any other country.

3. I certify I am not a US citizen or US resident for tax purposes. (encloase passport/ ID of non us country)

You can't certify you are not a US citizen if you are one, so nothing to do here.

4. I agree all above is correct SIGN HERE

Sign there

really not sure who she could even contact for help on this?
Thanks

I'm confused. I just answered all the questions and don't know at what point I would have needed help to complete this form.

EdSwippet

colsten wrote: »

Sounds she is a US citizen, so she will have to declare just that, and she'll be subject to whatever the US rules are on bank deposits. There is, however, a US/UK Double Taxation Agreement that should ensure that she doesn't have to pay more tax in any one of the two countries.

Perhaps, or perhaps not. The US doesn't recognize ISAs, so any ISA gains are subject to US tax, though not UK. The US has no capital gains allowance, so your first £10k of any capital gain is taxable to the US, though not UK. The US limits the tax free portion of any gain on sale of your house, so you could be on the hook for US tax if you move house, even though nothing is due to the UK. And so on. There are many places where the US/UK tax treaty simply fails to protect.

colsten wrote: »

Might be easier for you partner's mother to become naturalised if she intends to remain in the UK. That costs about £1,200, and takes about 6-12 months, and it of course subject to UK authorities approving the naturalisation application.

And then simplify life by renouncing US citizenship? Unfortunately there's a tax for this too -- the US has an 'exit tax' that it applies to some renunciants, though many folk will be able to avoid this. And the 'admin' fee for renouncing US citizenship went up just last week, from $450 to $2350. The US cites 'dramatic' increase in demand for this service as the reason for the fee rise -- make of that what you will.

shaun_from_Africa

This is probably the reason for the confusion:

leonc888 wrote: »

It mentioned she is identified as a non-uk resident but she has been living in this country since the 60's but was born in US, she still has a US passport but her whole life and currently still works here and pay NI and tax etc like normal with the rest of us..

If she is living and working in the UK then she shouldn't be classed as non resident in the UK.
Being registered as NR means that she will be getting interest on any accounts paid without tax being deducted, something that shouldn't be happening if she is employed and paying paying tax.

mgdavid

given the confusion of the OP that Colsten highlighted in post #2 I don't think it worth assuming anything - OP can you provide a copy of this letter with the personal details blanked out?

BeachNut

shaun_from_Africa wrote: »

Being registered as NR means that she will be getting interest on any accounts paid without tax being deducted, something that shouldn't be happening if she is employed and paying paying tax.

Only if she successfully submitted an R105 to YBS (who don't accept them anyway). Perhaps its the IRS that are chasing down their US citizens via HMRC for proper declaration if worldwide income.