UK MPs Urged to Reject FATCA Pact with US
British members of parliament (MPs) should reject a controversial tax agreement with the US as it is evident that American authorities are unlikely to honour the deal’s fundamental reciprocity clause, said the chief executive officer (CEO) of deVere Group, the world’s largest independent financial advisory organisation.
Nigel Green’s comments came in response to US Congressman Bill Posey, an influential member of the House Financial Services Committee, who, in a letter to the US Treasury Secretary, cast doubt on the Treasury’s ability to promise the world’s governments that they can expect financial information reporting with the US to be reciprocal, should they agree to enforce the Foreign Account Tax Compliance Act (FATCA).
“FATCA’s supposed guarantee of reciprocity has been the ‘hook’ for many governments, including Britain’s coalition,” said Green
“World governments were informed that if they signed a FATCA intergovernmental agreement (IGA) with the US Treasury, in return they will receive information on the financial affairs of their own citizens who live in the United States. The IGA will force all these governments’ financial institutions to report their American clients’ financial activities directly to the US Internal Revenue Service – meaning, in effect, they will act as de facto IRS snooping agents.
“However, as Congressman Posey’s letter underscores, the US Treasury does not have the legal authority to keep this promise of reciprocity. Meanwhile, MPs could be about to approve Clause 219 of Finance Bill 2, granting Her Majesty’s Revenue and Customs (HMRC) virtually unlimited power to impose FATCA in the UK – at huge expense to British financial institutions which will then, no doubt, be passed on to customers – on the false premise of US reciprocity.
Green concluded: “When the FATCA issue returns to the House of Commons, after it has been rubber-stamped in the Lords on 15 July, politicians must vote it down because the US is unlikely to keep its side of the deal.”