US Expats in UK urged to disclose

US citizens and green card holders in the UK are being urged to take advantage of the current Offshore Voluntary Disclosure Program (OVDP) which expires at the end of the August 2011.

Thousands of Americans working in the UK must ensure they fulfil their tax obligations to the US taxman or risk penalties that could include the loss of their US passports. There are about 6 million US citizens and green card holders living abroad, with estimates suggesting up to 1 million of those could be in the UK. Most have an obligation to file tax returns to the US Internal Revenue Service each year even if their income is taxed in their country of residence.

“The American tax authorities are determined to punish citizens they believe aren’t paying their fair share of tax,” said Seamus Murphy, senior tax manager at Taxback.com. “One element of this is a crackdown on assets held overseas and not disclosed. From 2012 foreign banks and financial institutions will be forced to be more transparent so clients who should be paying but aren’t – deliberately or otherwise – are likely to have the whistle blown on them,” explains Murphy.

Murphy says that scrutiny is becoming more detailed. "They now have to report, among other things, any financial accounts containing more than $10,000 and transactions involving foreign trusts. The ODVP is not a full amnesty, but it does reduce significantly the size of penalties. It will go back eight years and basically will wipe the slate clean," he says.

The authorities calculate that of the 16 million people who applied for US passports in 2008, 224,000 owed about $5.8 billion in federal taxes.

www.taxback.com