With September gearing into full swing and summer soon a distant memory, nothing marks ‘back-to-school’ more than the US tax filing deadline. Complex, convoluted and quite simply a headache, it’s very easy to see why September is a month of frenzy for any US taxpayer.
Before you exhale a sigh of relief over this side of the pond, any non-domiciled US citizen living overseas as an expatriate, the responsibilities to submit an annual tax return do not magically disappear. Yes, the Atlantic separates the UK and US by a mere 4,255 miles, however, it certainly doesn’t negate any obligations. As a UK-based IFA firm specialising in global financial planning with a prominent US-Anglo client base, we see this happen time and time again at Montfort. Of the 9 million US citizens living abroad, as according to the US State Department’s 2016 report, we estimate thousands upon thousands of US citizens have never filed a US tax return since leaving the US. This continues as a severely unknown requirement amongst the US expatriate community that is very rarely documented within the media, particularly the US, so to ensure an education in this area of finance.
Regardless of your domiciled location, the rules and associated deadlines for submitting income tax returns and settling estimated tax can be generally considered the same for all US citizens, regardless of whether you have ever lived in the US.
The key dates for your diary include the 28th September as the deadline by which to disclose an update on all US and UK tax matters must be met. Any individual that fails to comply immediately exposes themselves to hefty civil penalties and potential criminal action.
All can be attributed to FATCA (Foreign Account Tax Compliance Act) and the CRS (Common Reporting Standard) – a US initiative developed to improve global tax compliance and clarity, in addition to alliances between tax authorities to share information with the US Internal Revenue Service (IRS). Such authorities range from over 100 countries who conceded to share data on (US citizen) residents’ incomes, assets and investments through non-US institutions. One of these authorities includes the UK’s Her Majesty’s Revenue & Customs (HMRC) who will intercept such information from other international authorities later this year. The closing period for is the 28th September 2018, as outlined by the IRS, also marking the closure of its 2014 Offshore Disclosure Programme (OVDP).
“The OVDP was designed for taxpayers who had previously shown a failure to report overseas financial assets, and as a result, potentially faced civil penalties and criminal susceptibility, in addition to a requirement to pay the tax in its entirety on such assets”, comments Montfort financial advisor Alex Norwood. “The OVDP permits a protection against any criminal action while also grants a fixed penalty on taxes”, he continues.
The heat continues… By 30th September, US citizens are further required to correct any past UK tax errors in accordance with the UK’S 2017 ‘Requirement to Correct’ (RTC) legislation. Should HMRC later uncover any such mistakes, through data shared via the CRS initiative, heinous penalties will apply; 200% of the total tax and while you’re there, add 10% of the value of any related assets.
HMRC has been known to take things one step further to subsequently publish such details on its website which is monitored closely by the global media. Queue all the recent press attention of the Honours List and HMRC’s part to play as it exposes and ‘ranks’ tax payers in their complicity and accord of UK tax payments.
“Where pensions are also considered as overseas income, individuals with any offshore pension required to submit a US tax return, must further ensure this is taken into account, together with the associated complexities surrounding offshore pensions and such transfers”, adds Alex Norwood. “Pensions must therefore be reported, with a specialist investment manager and trustee is vital, to ensure appropriate tax reporting by providing data such as highest balance in the (US) tax year along with interest and dividends paid on investments.”
It goes without saying that the US and UK tax authorities are deeply intertwined in their affiliated measures to crackdown on tax avoidance, as they view it. Should you have any present or past association between both countries, it is integral that you review your taxation position. Should you be a US citizen and carrier of a US passport, you are affected, with the complexities a minefield. Expert advice in this area must be sought to ensure the safeguarding of not only your finances and assets, but also, criminal record with extreme severe measures in place. Ensure absolutely nothing is missed while also ensure your full compliance with both tax systems and their reporting obligations.


Should you wish to discuss your US tax return matters, please contact Montfort to speak to one our leading specialist financial advisors, who can subsequently assess your situation and direct you to the most-suitable US taxation resource. Call +44 (0)1483 202072 or email info@montfort-intl.com; montfort-intl.com

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