Ex-Pat - Lying about residency to open an account - Consequences?

EdGasketTheSecond

For an ex-pat it's neigh on impossible to open any sort of bank or broking account as soon as you declare foreign residency.



Assuming a UK address is available to use, what would be the consequences of opening any non-ISA account, say an online broker trading account, and just letting them assume you are UK resident? I mean, assuming its not an ISA and you are fraudulently trying to get tax breaks, I can't see what the problem is so long as they can reach you at a UK address?

xylophone

For an ex-pat it's neigh on impossible to open any sort of bank or broking account as soon as you declare foreign residency.

From the horse's mouth?:)

Assuming a UK address is available to use, what would be the consequences of opening any non-ISA account, say an online broker trading account, and just letting them assume you are UK resident? I mean, assuming its not an ISA and you are fraudulently trying to get tax breaks, I can't see what the problem is so long as they can reach you at a UK address?

Isn't there a declaration as to residency when you open an account?

TBC15

I think the intention to fib is in the title.

Not sure what the big deal is myself as long as the country you actually live/work in has no claim on tax arising from your investments.

EdGasketTheSecond

xylophone wrote: »

Isn't there a declaration as to residency when you open an account?

Some have, some just say in the T&C's you most be ordinarily resident in the UK. Anyway the question is the same.


Another point is that if you are UK resident but then emigrate, in general you can keep accounts already open running; you just can't open a new one. This seems contradictory.

traineepensioner

EdGasketTheSecond wrote: »

For an ex-pat it's neigh on impossible to open any sort of bank or broking account as soon as you declare foreign residency.



Assuming a UK address is available to use, what would be the consequences of opening any non-ISA account, say an online broker trading account, and just letting them assume you are UK resident? I mean, assuming its not an ISA and you are fraudulently trying to get tax breaks, I can't see what the problem is so long as they can reach you at a UK address?

I can't see a problem from the UK side and you'll only pay tax once you've exceeded your personal allowance for savings & investments. You don't say which country you are resident in but I know many expats in Spain that have kept their UK accounts after moving.
However, if you're a resident (tax payer) in Spain for example, you would be subject Spanish tax on all your UK savings & investments. You wouldn't have to pay tax twice but the tax rate would be dependent on your country of residence.

As an aside, we would love to move to Spain permanently but would lose too much income due to reduced allowances & increased Spanish tax rates.
(https://www.spainaccountants.com/tax-rates)

EdGasketTheSecond

It's not for me but someone else and it's Hong Kong. Great for tax so long as you dodge the rubber bullets.

bowlhead99

EdGasketTheSecond wrote: »

I mean, assuming its not an ISA and you are fraudulently trying to get tax breaks, I can't see what the problem is so long as they can reach you at a UK address?

Just to check: did you miss a word? Perhaps you mean that you can't see there's a problem "assuming its not an ISA and you are *not* fraudulently trying to get tax breaks"

Because if you /are/ trying to fraudulently get a break on your taxes - e.g. by not declaring that you are resident in country X so that the broker doesn't include you as a country X resident on the automatic exchange of information report that they file annually with HMRC, so that HMRC doesn't forward your account balance and totals of your dividends, interest, and gross sales proceeds to country X's tax authority, thereby helping you evade your income, wealth or gains taxes in country X - then you could imagine how that might be seen as naughty.

In the case of HK, where they don't tax international wealth, overseas dividend income, or have a capital gains regime, you would not have dodged any HK taxes because there were no HK taxes to pay on the UK account activity. But the UK broker was still supposed to report your activity to the HK tax authority via HMRC under the international financial account automatic information exchange agreement .

, say an online broker trading account, and just letting them assume you are UK resident?

It should not be the case that you are able to let them 'assume' you are a UK resident. Financial institutions are supposed to ask for an explicit confirmation of your residency status, and if they don't get it within a reasonable time, close the account.

You mentioned in a follow up comment that you think you don't always have to declare your residency, and instead, that "some just say in the T&C's you most be ordinarily resident in the UK". However, have you actually tested that and gone through the account opening process with them?

Because under the regulations, they are supposed to ask and you are supposed to tell them. So if there was later an argument about whether you did anything wrong, you wouldn't necessarily be able to say 'oh I didn't say I was resident in UK, you just assumed I was", because generally you will have actually told them that you were UK resident as part of the account opening process. Generally you can't open a financial account these days without being required to certify all your tax residencies.

Extending that, the fact that you are running a brokerage account in the UK having told the broker that you are resident in the UK, means that you shouldn't be surprised if in due course they tell HMRC that you are earning X dividends making Y asset disposals etc. If you are not over your personal allowances as a UK citizen it is perhaps not a problem because HMRC wouldn't need to take tax off you. But what if HMRC, just for fun, write to tell you they are curious whether you, as a UK resident, have any more worldwide income that you need to tell them about?

Will your response be that you are not really UK tax resident; that they have made a mistake and you really emigrated ages ago, and the only reason they hold the incorrect information that you are a UK resident is because you are the type of person who routinely lies about their residence status to financial institutions or other officials in order to obtain a financial advantage - such as more favourable account terms or being offered an account relationship which a financial institution would otherwise decline? Will that go down well with HMRC as a reason to believe they should trust that the self-admitted "fibber" is not UK resident at all and shouldn't pay UK taxes on his worldwide income?

You may decide that the chance of the above happening is pretty remote, so you may decide to lie and obtain the account by deception.

Anyway the question is the same.

Basically you are asking what harm is done if you lie to them about where you are resident.

In some countries it is an explicit offence under the local tax information exchange regulations to provide an inaccurate self-certification of status.

However in the UK, it may only be a civil matter, i.e. a breach of trust between you and the service provider whereby you obtain services by deception; it would be up to them to make the case that they lost out financially by providing you with an account while being misled about who you were and where you lived, causing an extra compliance burden to be placed upon them (such as enhanced risk of getting black marks from the FCA in relation to anti-money laundering /countering terrorist financing regulations, or from HMRC in relation to conducting proper due diligence under the international automatic exchange of information regulations).

In practice, they would be within their rights to close your accounts but it is not going to be worthwhile them suing you for what are minimal damages in the context of their overall existing compliance burden, especially when you are not even in the UK and therefore difficult to sue. You may just get blacklisted from opening accounts with other parts of their group, if they subsequently find out one way or another that you have been lying.

EdGasketTheSecond wrote: »

Another point is that if you are UK resident but then emigrate, in general you can keep accounts already open running; you just can't open a new one. This seems contradictory.

To play a little devil's advocate here, it is not contradictory.

Closing your account when you emigrate would lose them a customer - who they may know to be a lucrative customer and worth whatever administrative hassle it is to keep that customer revenue stream despite some extra compliance work. So automatic closure is not always going to happen.

By contrast, a new prospective customer from a foreign country - likely to create additional foreign account reporting obligations etc, maybe from a country without equivalent financial regulations or AML rules, for whom they do not already already know the source of wealth, source of funds, or account operating habits, and the financial institution may find it difficult to contact them in future, and the customer being based overseas might be more 'needy' from a customer servicing perspective etc etc - may just fall into the bucket of "generally, I can't be bothered taking on that sort of customer ; it won't harm my business to just turn down non-residents at the door instead".

Herbalus

Assuming there are no consequences for the taxman or government (eg ISA as mentioned you can’t have if not a resident as it’s a government rule), then the only rule you’d be breaking is the terms and conditions of the provider.

If they find out and if they care, the only thing they can really do is give you notice to close it.

Apodemus

I thought that the money laundering checks were designed to make it more difficult to do what is being suggested here? I’ve had to show my passport and prove my residency at a UK address to satisfy a financial services company.

Johnnyboy11

One consideration is whether your savings would be covered by the FSCS.

Voyager2002

EdGasketTheSecond wrote: »

It's not for me but someone else and it's Hong Kong. Great for tax so long as you dodge the rubber bullets.

Hong Kong is a global centre for financial services, so the obvious solution is to open an account there.

I faced this problem when living in West Africa and finding a way to open a stock trading account was a real hassle. One possible solution would have been to visit Hong Kong and walk into the office of someone like Fidelity there...