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U.K. Citizen Uses Crowdsourced Funds in FATCA Challenge

Posted on Sep. 16, 2019

A British citizen is using a crowdfunding platform to take on the U.S. Foreign Account Tax Compliance Act, claiming that the legislation is disproportionate to its objectives and violates fundamental human rights.

A U.S.-born British citizen who has resided in the United Kingdom for almost 20 years and identifies herself only as “Jenny” on legal action crowdfunding platform CrowdJustice has mounted a campaign to “protect the fundamental rights of Accidental Americans and other compliant U.S. citizens living abroad.” She says on her campaign page that she hadn’t heard of FATCA until her bank sent her a letter about her U.S. tax obligations and notified her that her personal information would be sent to U.S. authorities.

Jenny’s claim against HM Revenue & Customs includes complaints that the sharing of her personal and financial information with the U.S. government violates her rights to privacy and data protection, breaches the EU General Data Protection Regulation (GDPR), and exposes her and others to hackers. She claims that FATCA is making it difficult for U.S.-born British citizens to open or maintain bank accounts and that she isn’t responsible for tax under FATCA because, as a university research associate who works with deaf students, she earns “less than the $104,000 income tax exemption for Americans living abroad.”

“Sometimes it takes an ordinary person to defend individuals’ fundamental rights when public authorities seek to achieve honorable public objectives through disproportionate means,” her campaign page says. “I do not have offshore accounts and am not rich.”

“If her claim is successful, accidental Americans and others who find themselves in our client’s shoes will have greater protections over their personal and financial information, as HMRC will no longer be able to share this information with the IRS,” said Filippo Noseda of Mishcon de Reya, a London-based law firm representing Jenny.

An HMRC spokesperson told Tax Notes that the agency doesn’t comment on identifiable taxpayers and that “FATCA plays an important part in the multinational fight against tax avoidance and evasion.”

Jenny hopes to raise £50,000 and had received 74 pledges totaling £4,730 as of press time, with 26 days remaining in the campaign. Her profile page says she is asking for help because her legal challenge will be complicated and work-intensive. “Dealing with HMRC without going to court is costing several hundred thousand pounds,” her page says.

Donations are a demonstration of support for the cause, and some that have pledged money have left notes of encouragement, the profile page says. A U.S. expat in Germany said FATCA “affects us and all accidental Americans unfairly.” Another individual who pledged £100 accused the United Kingdom of selectively bartering “private and personal data of its accidental and dual citizens . . . in order to maintain access to the financial sector in the U.S.”

Noseda said in a September 10 statement on Mishcon de Reya’s website that the GDPR “was introduced to give individuals back control of their data,” and that FATCA is contrary to the principles of the regulation. “With FATCA, there is a particular issue with sending information to a non-[European Economic Area] country . . . without appropriate safeguards,” which the Court of Justice of the European Union has found illegal, he said. Mishcon de Reya also represents an EU national in a challenge of the common reporting standard.

Earlier this year, HMRC said it was deleting the voice records of 5 million taxpayers who enrolled in the agency’s voice ID program before it was changed to comply with GDPR standards and have not reconfirmed their consent. That program came under fire when an independent watchdog found that data was being collected in violation of EU privacy laws.

FATCA has long been a focus of challenges abroad based on alleged privacy violations, unconstitutionality, and other grounds. In July the Federal Court of Canada in Vancouver dismissed the claims of plaintiffs who argued that measures implementing the intergovernmental agreement between Canada and the United States are unconstitutional.

Also in July, the French Administrative Supreme Court rejected the France-based Association of Accidental Americans' challenge of a decree implementing the IGA between France and the United States. At the time, the association planned to refer a complaint alleging breach of EU law to the European Commission.

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