Why your British bank suddenly wants to know if you are American

It is a request from a financial institution to establish whether an account belongs to a US person. The institution must then either document that it does not, or report it. The letter is the first step in that process.

FATCA is the American law behind it.

The IRS page on FATCA describes the regime.

Because the UK agreed to it. Britain signed a Model 1 intergovernmental agreement with the United States on 12 September 2012, and it entered into force on 11 August 2014. Under that model, banks report to HMRC, which exchanges the information with the IRS.

So your bank reports to a British authority, not directly to America.

The Treasury's FATCA page lists the agreement.

HMRC therefore sees the same information your bank reports. That is worth remembering if your British affairs are untidy too.

Usually something in the bank's own records. Due diligence looks for indications of a US connection, and HMRC guidance names an unambiguous US place of birth as one of them. A US telephone number or address can also raise a flag.

Old records matter as much as new ones.

That is why a FATCA letter can arrive decades after the account was opened.

Sometimes a change to your details sets it off. A new address, a new product or a name change can prompt a fresh review of the file.

For FATCA, yes. HMRC guidance says that where the electronic search shows unambiguously that the account holder was born in the USA, the account is reportable unless the bank applies the curing procedure for that indication.

Nothing else about you has to look American.

The rule sits in HMRC's manual on a US place of birth.

That surprises people who have never held a US passport. The bank is not judging your citizenship, only following the rule.

HMRC lists the documents. They include a self-certification that you are neither a US citizen nor a US resident for tax, a non-US passport or other government identification, and a Certificate of Loss of Nationality or a reasonable explanation of why you do not have one.

Which applies depends on the truth of your position.

A British passport alone does not prove you are not also American.

A self-certification that you are not a US citizen when you are one. It is the quickest way to make the letter go away, and it is a false statement to a financial institution that other records may later contradict.

The bank does not need to prove anything to act on a mismatch.

In our practice this is the single most damaging response we see, far worse than a late reply.

If you have already signed one wrongly, correct it with the bank as part of getting compliant, rather than hoping it is never checked.

The bank reports the account anyway, treated as held by a US person, because the checks require it. Ignoring the letter does not keep you out of the exchange. It only removes your chance to shape what gets said.

Deadlines in these letters are usually real.

A short reply saying you are taking advice often buys time.

Because it must report one for accounts held by Americans. HMRC guidance makes the US taxpayer number mandatory for pre-existing accounts, with relief for missing numbers only where the bank reports a date of birth and keeps asking every year.

So the letters repeat until the number arrives.

The detail is in HMRC's manual on reporting a US TIN.

It is the American form a US person uses to give a taxpayer number to an institution. Banks use it to record your status and number for their FATCA files.

Only sign it if you are a US person.

The IRS page for Form W-9 explains who completes it.

Non-US people are sometimes sent the wrong form. A W-8BEN is the version for people who are not US persons, so check which one you were given.

Usually every account you hold with that institution, not just the one named. Current accounts, savings, ISAs and investment accounts at the same bank all sit under the same customer record, so one answer normally covers them all.

Other banks will write separately, often in the same year.

Answer each FATCA letter consistently, since the information all ends up in one place.

Each holder is assessed separately. An account shared with a British spouse becomes reportable because of the American holder, and the bank may write to both of you even though only one of you has any US connection at all.

Your spouse does not become American by sharing an account.

However, the balance of the whole account counts towards your own FBAR threshold, because you have an interest in all of it.

No. The FATCA letter comes from your bank, as part of routine checks, and it says nothing about whether the IRS has looked at you. What it does mean is that information about your account is heading into the exchange.

Once that happens, the IRS can compare it with its own records.

So the letter is a good moment to get ahead, not a reason to panic.

Then the letter is the prompt to fix that, and the order matters. Get a Social Security number, prepare the missing returns and FBARs, and use a structured route rather than quietly filing this year alone.

For people abroad who did not know, the Streamlined Foreign route usually fits.

We explain why a quiet fix backfires in the quiet fix that makes an IRS problem louder.

The Foreign route needs three years of returns and six years of FBARs, and it carries no penalties for those who qualify.

That is a commercial decision for each bank, and practice varies between institutions. Some are wary of customers they cannot document, while others simply report the account and carry on as normal, so the outcome depends more on your bank than on the rules.

Answering accurately and promptly is the best protection either way.

Where an account matters to your mortgage or salary, mention that when you reply.

Not because of FATCA as such, since the report concerns American status. However, HMRC runs its own data exchanges with many countries, and it already receives plenty of information about British residents' accounts.

Your British tax position is a separate question.

We cover how HMRC gathers information in how HMRC knows about your income.

Largely, yes, depending on the product and the provider. ISA managers and investment platforms are financial institutions for these purposes and run their own checks, while some pension arrangements are treated differently under the agreement.

Expect a FATCA letter from each provider in turn rather than one letter for everything.

Keep a list of who has asked and what you answered.

Keep the letter, your reply, and any form you signed, with the date you sent it. Add your birth certificate, passports, and any Certificate of Loss of Nationality or Social Security card, so that the evidence for your answer sits in one place.

These papers answer the same question for every institution you deal with.

Store them together, because the next letter will ask for the same things.

Take these in order, and do not sign anything until step three.

Take a Cardiff solicitor born in New York during her parents' short posting. Her bank sends a FATCA letter asking for a US tax number within ninety days.

She replies that she is taking advice, applies for a Social Security number, and catches up under the Streamlined Foreign route. Her bank receives the number four months later and the letters stop.

She never signed the declaration that she was not American. This example is illustrative, not advice.

Her second bank wrote the following spring. By then she simply sent the same number, and the matter closed in a week.

Usually a stated number of days, often a few months, set by the bank rather than by law. The period is written in the letter, and it varies between institutions.

If you need longer, say so in writing before the deadline.

Our clients who replied early and briefly almost always received the extra time they asked for.

First, signing a self-certification you know is untrue.

Second, moving to another bank, which runs exactly the same checks.

Third, giving the bank a number before dealing with years of missing filings.

Fourth, assuming a British passport settles the question when you may hold two nationalities.

Fifth, answering one bank one way and another bank differently. The information converges at HMRC and then the IRS.

We read the FATCA letter with you, establish your citizenship position and decide the honest response before anything is signed. Where you are a citizen who has not filed, we prepare the Streamlined filing package and time the reply to your bank around it.

We also look at the British side where it matters.

This article is general information, not personal tax advice. Talk to us before the bank's deadline.