Platform Fatca concerns grow as Ascentric closes door on US clients
Ascentric has stopped accepting US clients as a result of uncertainty over the foreign account tax compliance act, while other platforms are also unclear on how they will deal with the upcoming US law.
From January 2014, all foreign finance institutions must report details of any US taxpayers they deal with directly to the Internal Revenue Service and US Treasury.
An FFI is defined as a foreign entity that accepts deposits, holds financial assets for the accounts of others or is in the business of investment or trading in securities, commodities or derivatives.
The penalty for non-compliance is a 30 per cent with-holding tax on income distributions and proceeds from US-sourced investments.
Ascentric head of marketing Dominic Ventham says: “There is uncertainty over the legislation but we can no longer accept a US person on the platform.”
He says the platform has not yet decided how it will deal with its 50 existing US clients.
Cofunds says it is in the process of writing to clients who have a US address on the system, asking them for information about their tax liabilities. Clients have until December 9 to respond.
Fidelity Worldwide Investment head of commercial Ed Dymott says FundsNetwork has not yet decided its Fatca strategy. He says: “Once we have the policy regulations we will tackle the Fatca requirements.”
Skandia and Nucleus may look to advisers to provide confirmation of clients’ tax status.
Skandia head of financial planning Phil Carroll says: “Skandia’s platform business may be the foreign financial institution with Fatca obligations, although we may look to advisers to provide information.”
Nucleus chief finance officer Aileen Mathieson says: “My initial view is that IFAs are most able to determine if a client has a US tax liability since they are closest to them. We will be issuing a guide to advisers early next year.”
Transact head of marketing Malcolm Murray says: “About 200 clients are either US citizens or residents. We will wait to see the final rules before acting.”