From the unintended consequences department, the Obama administration’s planned crackdown on U.S. tax avoiders may cause big problems for Americans trying to do business in the United Kingdom, the Telegraph (UK) reports.
British “bank bosses say they are being asked to take on the task of collecting American taxes at a cost and legal liability that are inexpedient.” The article continues:
Andy Thompson of Association of Private Client Investment Managers and Stockbrokers (APCIMS) said: “The cost and administration of the US tax regime is causing UK investment firms to consider disinvesting in US shares on behalf of their clients. This is not right and emphasises that the administration of a tax regime on a global scale without any flexibility damages the very economy it is trying to protect.”
One executive at a top UK bank who didn’t want to be named for fear of angering the IRS said: “It’s just about manageable under the current system – and that’s because we’re big. The danger to us is suddenly being hauled over the coals by the IRS for a client that hasn’t paid proper taxes. The audit costs will soar. We’ll have to pay it but I know plenty of smaller players won’t.” […]