Dr Pepper Shares - Computershare Nightmare

oaksnorton

First post, hope this is the applicable forum.


In short, when Mum died in April she had a number of Dr Pepper Shares. I was appointed Executor so had to sell them. Firstly, we had to obtain a costly 'Medallion Guarantee Stamp' which we did before we could transfer and sell the shares.


Computershare, the share registrar in the US also requested a W8-BEN form with the transfer/sale request for tax relief at source, which we supplied.


Computershare did transfer and sell the shares, BUT, they then sent us a letter advising the account could not be certified, so the account is subject to 30% withholding tax until we submit a W8-BEN-E because the 'beneficial owner' is an entity not an individual.


So, has anybody here successfully completed a W8-BEN-E under these circumstances or know anyone who has and received a refund, or know where I could get advice?


There must be thousands of other ex Cadbury Schweppes employees who will be in the same predicament with more cases in future due the age of the ex employees and the withholding tax in Mums case is nearly 10,000 US dollars.


I think it is outrageous that we are being treated like this by these monolithic US Institutions. We are not International money launderers!


God Bless America indeed...

Keep_pedalling

Good luck with that, my wife inherited some of these from her uncle, but she had them transfered into her name. She sold them soon afterwards as handling the $ dividend cheques was a right PITA.

oaksnorton

Seems anything to do with holding or transferring these shares is a PITA and an opportunity for lawyers, accountants and governments to rinse you even further.


My advice (in hindsight) would be to sell them before they become part of a deceased estate as they just become someone else's problem down the line.


The UK government should do something about this appalling situation. We are taxed enough in this Country as it is so we certainly don't need Uncle Sam screwing us over as well.

Rollinghome

Keep_pedalling wrote: »

She sold them soon afterwards as handling the $ dividend cheques was a right PITA.

And probably expensive. Another way is to join their Dividend Reinvestment scheme so that all divis automatically buy additional shares. No more cheques.

Oaksnorton is probably right that holding individual foreign shares isn't a great idea for most people with modest investments and a collective investment such as a fund or IT is usually a better option.

robatwork

oaksnorton wrote: »

The UK government should do something about this appalling situation. We are taxed enough in this Country as it is so we certainly don't need Uncle Sam screwing us over as well.

A good few years ago I was stood at a slot machine in Las Vegas.
Whaddya know - 3 x 7s came up and I won the "jackpot" of $1000. Flashing lights, ringing bells, and about 5 security guards appeared like the shopkeeper from Mr Ben.

"Excuse me Sir, are you native or alien to Nevada?"

And that was 30% I think of my winnings straight back to the house.

Yee hah.

EdSwippet

robatwork wrote: »

And that was 30% I think of my winnings straight back to the house.

Assuming you are not a US citizen, then for what it's worth you could probably have reclaimed this from the IRS. The US/UK tax treaty is completely silent on gambling winnings, making them 'other income' and so covered by article 22. Under that article for you they would be taxable only to the UK. And since the UK doesn't tax gambling winnings, effectively tax-free.

If "a good few years" is less than three and if you have proof of withholding you could still reclaim the money from the IRS. I suspect that ship has long since sailed, though.

EdSwippet

oaksnorton wrote: »

Computershare did transfer and sell the shares, BUT, they then sent us a letter advising the account could not be certified, so the account is subject to 30% withholding tax until we submit a W8-BEN-E because the 'beneficial owner' is an entity not an individual.

The W-8BEN-E form is horrific, but in practice you should find that most of it doesn't apply to you. It is the result of overzealous administration of an overbearing US tax law known as FATCA, which entraps non-US financial institutions -- banks, building societies, brokers, and so on -- into becoming unpaid IRS enforcers, so most of it is taken up with trying to separate out Foreign Financial Entities from Non-Financial Foreign Entities from Foreign Financial Institutions from... well, you get the picture. A heap of nonsensical complexity for little if any gain to anyone.

Since neither you nor your mother's estate are financial entities of any type, the estate would be a 'Passive NFFE' (hideous, isn't it?!). So if it were me completing this -- and you should note that I have never actually had to do this -- I would broadly follow this example and flowchart. That is, complete all of part I, ticking 'Estate' on line 4 and 'Passive NFFE' on line 5. In Part XXVI tick 40a and b (unless any estate beneficiary is a US citizen, then use c and list them out later -- probably doesn't apply), sign at the bottom by completing Part XXX, send it to Computershare and wait to see what happens. I think you get to leave every other form Part blank.

Note that W-8 forms are held by the broker or custodian and never (normally) sent onwards to the IRS, so the 'penalty of perjury' nonsense at the end of this form is nothing to worry overmuch about. If Computershare don't like how you filled in the form then they need to tell you why, otherwise they have no excuse not to act on it.

If all of this somehow fails to do the trick then as a last resort you should be able to reclaim any US withholding here from the IRS. This will require several rather fiddly forms and probably a very long wait, but should be possible if Computershare remain intransigent.

oaksnorton wrote: »

I think it is outrageous that we are being treated like this by these monolithic US Institutions. We are not International money launderers!

It is disgusting. Unfortunately it is the way of the world just now. The US is the larger bully, but the UK and other countries are by no means not also involved. The UK in particular signed on to FATCA with indecent haste, and with no regard at all for the consequences to UK investors and to US citizens living in the UK.

The best defence against all of this is to stay as well away from making any direct US investments as possible, typically by using funds or ETFs as the intermediary. But it looks like you didn't have that option here. Sorry you have to deal with it. It's a mess, for sure.

Finally, the disclaimer: this isn't my day job, so please take it for what it's worth. I've fought bits of the US bureaucracy before, but never W-8BEN-E specifically, so do please check everything I've mentioned carefully before relying on any of it. I'm just some random bloke on the internet.

oaksnorton

Thanks all.

I am currently waiting to hear whether the new W8-BEN-E will be accepted, but I doubt it will from what I have learnt since regarding the necessary tax treaty information required for Part III of the form.

In the worse case scenario, assuming further W8-BEN-E's get rejected and we get time barred by Computershare, does anyone have any idea how much I should set aside from the estate for an accountant to submit a Tax Return direct to the IRS to claim a refund of the withholding tax and how long this process might take?

What a kerfuffle...

EdSwippet

oaksnorton wrote: »

... but I doubt it will from what I have learnt since regarding the necessary tax treaty information required for Part III of the form.

I am not sure what you have learnt about this part, but as far as I can tell all you really need do is write "UNITED KINGDOM" on line 14a and Computershare should do the rest. In particular the IRS provides notes for 'withholding agents', including a handy-dandy table for them to use when applying withholding to residents of treaty countries, so it shouldn't be necessary for you to provide any further treaty details.

Finally, I'm not at all sure why Computershare might reject a W-8 form without saying clearly what they need to see on it. Have you engaged with them directly, told them your situation, and asked them how the W-8 should look so that they can send you the money without any specious withholding? Because right now this appears to resemble a game of Battleships, where you make a guess as to how the W-8 should look, Computershare responds "close, but not right", and you get to try again without any guidance from them as to what they actually expect. So either Computershare know what the right W-8 should look like for your situation, in which case they could just tell you, or they don't (in which case I don't see that you could ever get it right, as they'd just refuse everything!).

Have Computershare even said whether this 30% is general US income tax withholding or specific FATCA withholding? If they haven't, it's hard even to know what the problem is that you need to remedy with a (succession of) W-8 forms.

All very frustrating.

oaksnorton

What I have learnt is that after five attempts at this form they just keep writing back with the same standard letter stating:-


'Please accept this letter as confirmation that we have received your submitted Form W-8BEN-E claiming treaty benefits. However, the Internal Revenue Service requires that Line 14a, 14b and type of limitation of benefits are selected under Part III. Due to this fact, we were unable to honour the treaty benefits claimed on the Form W-8BEN-E you have submitted, and your account is subject to Withholding.


There are 30 treaty articles, each with many paragraphs and sub paragraphs so finding and choosing the relevant Article, paragraph and sub paragraph for this situation is baffling and open to interpretation by the particular withholding agent, although they will not tell you what it is they need.


So, yes I have engaged directly with Computershare, but have now given up as the call centre agents at Computershare all read the same script, 'For legal reasons that we trust you understand, we are not qualified to provide you with tax advice'.

Yes, I have spoken to HMRC about what US UK Double taxation treaty would be applicable and they trot out the same line as Computershare and bat it back to them.

'Sorry, down to you Sonny Jim, nothing to do with us', speak to Computershare.


Yes, all very frustrating indeed.

bostonerimus

HMRC cannot help you with US taxation, but you must obviously pay any UK capital gains tax due on the sale of these US shares.
As for W8-BEN-E

14.a "United Kingdom"
14.b check first box and the "other" box and claim "Article 13 paragraph 5, 0% withholding and capital gains tax for NRA UK resident" if you want to avoid withholding and US capital gains.

15. Fill in with Article 13 paragraph 5, claim 0% tax as you are a NRA resident in the UK and not subject to withholding of US capital gains in the shares.