Episode 96
FBAR, PFICs & Penalty Stacking: The Real Cost of Getting US Tax Wrong as a Brit
Most UK-US cross-border tax advisors fall into one of two camps: UK-based specialists who understand British and US tax intimately but charge eye-watering fees, or US-based CPAs who know their side of the Atlantic but have insufficient grasp of the UK side of things. This episode explores what happens when British expats end up in the wrong camp, and why finding someone who genuinely understands both systems, including the US UK tax treaty, while being based in America, has been so hard to come by.
Richard Taylor, Chartered Financial Planner and founder of Plan First Wealth, is joined by Toni Sculthorpe, founder of Avante Tax and known online as “Your Tax Lady,” to unpack the gap she’s spent the last decade filling. After 25 years as a UK accountant, Toni was pulled into cross-border work when a client’s US-based Amazon business exposed how badly disconnected American and British tax advice can be. As a British expat herself, now based in North Carolina, Toni frames the conversation through the lens of clients navigating dual tax UK and US obligations on both sides of the Atlantic.
Richard and Toni walk through the most common, and most costly, mistakes British expats make once they’ve relocated: unreported FBAR accounts, ISAs that trigger PFIC penalties, mishandling a UK pension or US pensions during the transition, and the temptation to take tax advice from Facebook groups or ChatGPT instead of getting proper US tax help from a qualified professional. They break down why the IRS’s reasonable cause can test hinges on whether you disclosed everything to your advisor, whether that advisor was actually qualified to advise on your situation, and whether you followed their advice, and why skipping professional guidance before a move can turn a $2,000-3,000 problem into a $30,000+ one.
They also discuss why tax compliance and financial planning are too often handled in silos, with tax advisors and financial planners on opposite sides of the Atlantic never speaking to each other, and what it looks like when those two roles work in tandem instead of in isolation.
Whether you’re moving to America, already living there and unsure if you’re fully compliant, or advising clients with assets on both sides of the Atlantic, this episode covers the specific mechanics of what gets missed, not just the broad strokes. It fits into cross-border financial planning for anyone managing international wealth across the UK and US.
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Expat Wealth is supported by Plan First Wealth. Plan First Wealth is a Registered Investment Advisor serving fellow expatriates and immigrants living across the US on matters such as retirement planning, investment management, tax planning and non-US asset management.
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Expat Wealth is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.
Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.
ABOUT RICHARD:
Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.
As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).
Connect with Richard on LinkedIn
TRANSCRIPT:
Toni Sculthorpe: [00:00:00 – 00:00:10]
It was just very much of, oh, I can do this, this is my lane, I can do this box. He knew about like some bits of UK tax and things like that, but not enough to like be useful.
Richard Taylor: [00:00:10 – 00:00:18]
I’ve always just lent into the British angle to be fair, a big part because like you, the stakes just feel higher.
Toni Sculthorpe: [00:00:18 – 00:00:29]
We have come across so many people that have like moved. They haven’t informed HMRC that they’ve moved. So they’ve just turned up here and they think, okay, I’ve now got a job here, I’ve now got a business here, I’ll just start paying tax here.
Richard Taylor: [00:00:29 – 00:02:03]
How big a deal is being in non compliance? Absolutely. Mass welcome to Expat Wealth, a Plan first wealth podcast dedicated to helping ambitious expatriates in America and Americans overseas thrive. I’m your host Richard Taylor and Plan first wealth is the business I founded and run today and we work with successful expatriates, immigrants and internationally minded Americans to make the most of their opportunity and avoid the expat landmines. First, a quick disclaimer. While Plan First Wealth LLC is an SEC Registered Investment Advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views and positions of Plant First Wealth. Information presented is for educational purposes only. Now, if you aren’t already receiving our emails, please go to our website www.planfirstwealth.com and sign up there. It’s free and you’ll be notified every time we drop a new episode and so much more. Okay, let’s get back to this week’s show. Welcome to our Ask An Expert show where I invite a fellow professional to come in and talk to us about the important issues Exp need to be thinking about. My guest today is your tax lady, that’s the name she goes by on social media, Tony Sculthorpe of Avante Tax. And I’m very excited about this one because Tony is something we have been looking for for years. She is a US UK cross border tax advisor based right here in the good old US of A. So I’m going to leave it there. Let’s get straight into this without further ado. Hi Tony, welcome to Expat Wealth.
Toni Sculthorpe: [00:02:03 – 00:02:04]
Hi Richard, how are you today?
Richard Taylor: [00:02:04 – 00:02:33]
I am very good, thank you. So let me just explain why I’m so glad we found you. I’m so happy to have found you. Expat wealth is a podcast for Plan First Wealth Business I founded and run and we work with successful British expats living across the US And I Bang on and on and on about this and every single person listening to this will have heard me say a million times, I think having a cross border tax advisor is absolutely critical to making the most of your opportunity. Avoiding the landmines, all that good stuff.
Toni Sculthorpe: [00:02:33 – 00:02:34]
Absolutely.
Richard Taylor: [00:02:35 – 00:03:18]
I also think it’s not. A cross border isn’t good enough. I mean, cross border are in the minority, but to really do it properly you need UK US cross border is half, you know, understanding all the, all the, all the US complexity to do with cross border is half the problem. But you need to know the UK side of it. You know, the UK stuff. And in my experience, all the really good UK US cross border tax advisors are in the uk. That blows people’s mind, but it’s because they are. There are loads of Americans in the uk, so there are. These are UK qualified accountants who have then also got US qualified and are primarily working with successful Americans in Britain. They’re really expensive.
Toni Sculthorpe: [00:03:18 – 00:03:20]
Stupidly expensive, yes.
Richard Taylor: [00:03:20 – 00:03:25]
Really good. Yeah, yeah, really good, but really expensive.
Toni Sculthorpe: [00:03:25 – 00:03:26]
Yeah, absolutely.
Richard Taylor: [00:03:26 – 00:03:52]
People balk at that. I understand why, because we’re talking real money, year on year. So then people want someone in the us and also I found that people living in America want their advisors to be in America. And I don’t. I do. I kind of understand why. But in my experience, if an American based cross border tax advisor, 99 times out of 100 or certainly the 99 times I’ve asked before, I’ve found, before I’ve been put into contact with you. They are generically cross border.
Toni Sculthorpe: [00:03:53 – 00:03:53]
Yes.
Richard Taylor: [00:03:53 – 00:05:06]
Right. So they understand that the US complexities, fat care, FBI, all the stuff we’ll talk about, but they don’t know. They don’t know the UK side of things as well. They know. They might know what a SIP is, but perhaps they don’t know what an ICE was. I’m sure they don’t know what a onshore bond versus an offshore bond is. You know that these subtle differences that can make a big difference. That’s a situation we’ve been in for, for, for years, for the eight years since I launched the firm and now I found you and I’m extremely excited because you are uk, us, but you are based here. And I think you could fill this gap that has existed the entire time I’ve been doing it. So I’m very, very excited to do this. I will just say as well to anyone listening, today is the day that England play Argentina in the semi final of the World Cup. So if I’m, if, if I’m giving Off bundle of nervous energy vibes. It’s because I’m a bundle of nervous energy. So I’m very excited. No, no, no, no, no. Not for Tony. I’m extremely excited about having Tony on the podcast, but I’m also more excited about the football. I have a bundle of nerves for three o’ clock today when hopefully England will prevail over Argentina. Yeah, put that to one side.
Toni Sculthorpe: [00:05:06 – 00:05:20]
I am the worst English national, I suppose, because I have not been following the football at all. I’ve checked the score after I’ve heard that they’ve played, but someone told me the day they were playing and I was like, didn’t even know they played. So, yeah, sorry, everybody, I’m not into.
Richard Taylor: [00:05:20 – 00:05:26]
The not following the football game. I mean, you’ve just lost us. You’ve just ostracized half our audience. But I’m sure we can recover.
Toni Sculthorpe: [00:05:26 – 00:05:29]
Yes, we will. I’ll save them money, so it’ll be fine. Yeah.
Richard Taylor: [00:05:29 – 00:05:44]
When they hear about. Exactly. When they hear about your background, when they know what you can do for them, you’ll win them back with that introduction, please tell. I’d like you to share your story with everyone. Tell everyone what you were doing in the UK and how you’ve ended up here in the US and your journey so far.
Toni Sculthorpe: [00:05:45 – 00:05:49]
So it’s a bit of a funny one. So. Hi, everyone. Sorry, I’m Tony, your tax lady from Avante Tax.
Richard Taylor: [00:05:50 – 00:05:51]
Oh, sorry, I say.
Toni Sculthorpe: [00:05:51 – 00:05:51]
What?
Richard Taylor: [00:05:51 – 00:05:56]
I just didn’t drop your tax lady. Yes, tell everyone. Where’s that come from? What’s that about?
Toni Sculthorpe: [00:05:56 – 00:06:10]
So it started off with a couple of clients and just people on. I was like, oh, you need to say, Tony’s your tax lady. Go and speak to Tony. She’s a tax lady. So it just kind of like built on from there. So, yeah, and it just kind of got like, oh, yes, your tax lady, Tony. So, yeah, that’s where that came from.
Richard Taylor: [00:06:10 – 00:06:16]
So. So is that what you go by? I mean, I pulled that from LinkedIn, but is that what you go by on social media? On Facebook and Instagram?
Toni Sculthorpe: [00:06:16 – 00:06:24]
Yes, we have got Facebook page, but I don’t actually use that one as much for that. It’s more on the Avante Tax Facebook page. But on TikTok, you’ll find me as your tax lady.
Richard Taylor: [00:06:24 – 00:06:30]
Your tax lady. Yes, I love it. So it’s just like, oh, she’s my tax lady. She’s my. She, she. So she can be your tax lady. I love your tax lady.
Toni Sculthorpe: [00:06:30 – 00:06:32]
That’s what you need. She’s your tax lady.
Richard Taylor: [00:06:32 – 00:06:33]
Very good.
Toni Sculthorpe: [00:06:33 – 00:07:27]
So I have been doing accounts in the UK for over 25 years, which makes me feel really old. So let’s just skip past that bit. And we had a client about 12 years ago who came on board and they were, they’d set up a business in the us, they were trading in the UK and started doing like Amazon selling in the uk in the us. So they need to set up an entity over here and had a US CPA and he was fantastic but didn’t have a clue about anything to do with the uk. So it quickly became apparent that everything that he was trying to do here in the US was completely counterproductive to what we were doing in the uk. And so I kind of got involved then, started like studying all the tax law and everything and ended up doing all the training to do it, go with it and was then advising him what he needed to do in the us. So it didn’t impact the UK and it kind of just grew from there really.
Richard Taylor: [00:07:27 – 00:07:36]
We then, this is classic, this is classic. So you have a. Yeah, so a client, British client, goes to see a U.S. cPA, U.S. cPA says, Yep, no problem.
Toni Sculthorpe: [00:07:36 – 00:07:37]
Yeah.
Richard Taylor: [00:07:37 – 00:07:50]
And everything they recommend just completely buckets up what you’re doing in the uk and they see the US CPA as great as they are, hasn’t got a clue about any of this. There’s not even a thought, there’s not even a realization that, oh, what we do here might impact what happens in the uk.
Toni Sculthorpe: [00:07:51 – 00:08:14]
No, it was just very much of, oh, I can do this, this is my lane, I can do this box. He knew about like some bits of UK tax and things like that, but not enough to like be useful. So. Yeah, and then it just kind of started from there and then we just kept getting recommended to different people because obviously in that sort of like group again, it’s a bit of a niche area and it’s like, oh, again, oh, you need to speak to Tony, she’ll be your tax lady and she’ll sort it out for you. So that’s kind of like where that grew from.
Richard Taylor: [00:08:14 – 00:08:31]
So this started 12 years ago. You’re a UK accountant doing UK accountant things. So a client moves to America, you then have, you know, a crash course in the wonders of some cross border business stuff. And then it just one client turns, two clients turn into three clients. And then.
Toni Sculthorpe: [00:08:31 – 00:09:36]
Yeah, it’s just kind of growing from there really. And then how we got here, we actually moved here four years ago. Well, being backwards and forwards a lot since over the last 10 years but I’ve got two small kids and so we kind of got a little bit much traveling backwards and forwards and stuff with them. And so four years ago we sort of said like, we’re going to do this now. Like let’s, let’s. We went on vacation to Florida, my husband’s, we’re into NASCAR as a family. So we’d gone to see the Daytona 500 and we came back and it was pouring with rain in the UK and we got off the plane, it’s raining, it’s gray and miserable. And my husband just looked at me and goes, I’m done with this. Let’s, let’s move, let’s finally do it. So we looked into it, went all through it and we’re based in North Carolina and the only reason why we’re based in North Carolina is because my husband literally googled best places to live in America and North Carolina came up and so yeah, we came here for a quick five day vacation and just to have a look around. Never been to North Carolina before and by the time we’d left we’d agreed to buy a house and was like, okay, we need to make sure this happens now because we put all of our eggs in the basket and off we go. So yeah, that’s how come we’re here in North Carolina now.
Richard Taylor: [00:09:37 – 00:09:43]
So four years in is North Carolina meeting. It’s fitting the bill as one of the best places to live in America.
Toni Sculthorpe: [00:09:43 – 00:09:54]
Absolutely. We, for us, definitely it suits us. We’ve got, you get all the seasons because I know people like go to Florida but the heat, it’s too much heat sometimes for us. So yeah, it fits well.
Richard Taylor: [00:09:58 – 00:10:01]
And did you know what you were going to do?
Toni Sculthorpe: [00:10:01 – 00:11:11]
So originally not so much. I’ve still got my UK practice and we still got UK based clients. We still do with them. I speak to them on a daily basis and it was kind of just a case of like let’s go over see how continue with the cross border businesses that we were working with. And then as we sort of got here it kind of got out that in locally because there’s quite a lot of expats actually in North Carolina that we do expat taxes and so and obviously just being British, as soon as anyone hears the accent they, they want to oh, I’ve got British friend. And so we got put in contact with people and yeah, it just kind of like started going from there and then I was in a couple of groups on Facebook which I don’t know, I’m still trying to decide if it’s a good or a bad thing. And I started seeing posts on there of people giving other people advice or people asking for advice and things on that. And so then it kind of just sort of. I’ve realized that there’s such a big gap in the market from like you say US CPAs or US advisors knowing what the rules are in other countries and other people’s assets and things like that. And so yeah, I just. In the last year we’ve been marketing a lot more at the expat market, but before that we were doing a lot of like local tax returns and things like that.
Richard Taylor: [00:11:11 – 00:11:13]
So you’re a newly arrived British.
Toni Sculthorpe: [00:11:13 – 00:11:13]
Yeah.
Richard Taylor: [00:11:13 – 00:11:17]
In North Carolina, you’ve set up Avante tax pretty soon, I imagine.
Toni Sculthorpe: [00:11:17 – 00:11:18]
Yes. Yeah.
Richard Taylor: [00:11:18 – 00:11:22]
You’ve not, you, you’re not yet leaning into the cross border angle, which you.
Toni Sculthorpe: [00:11:22 – 00:11:23]
Are now as much. Yep.
Richard Taylor: [00:11:23 – 00:11:27]
And are you having. How did you find attracting American clients?
Toni Sculthorpe: [00:11:28 – 00:11:37]
They love the accent. As soon as they sort of like can hear any, like can hear the accent, they just, they just want to come and sit and listen to me. So like, oh yeah, that’s fine. I can do your taxes at the same time.
Richard Taylor: [00:11:37 – 00:11:44]
Really. So you’ve had no problem attracting American clients. Why then lean into the expat side?
Toni Sculthorpe: [00:11:44 – 00:11:57]
Because there’s. I love helping people. I’m a bit of a sucker for that really. And there’s so much bad advice out there. I want to make sure people are getting the right advice because it’s cost. It can cost people literally thousands, tens of thousands.
Richard Taylor: [00:11:57 – 00:12:27]
For the real money. Yeah, right. Real money. And this and what something. People never factor in the emotional cost. There is a real emotional cost to, to even sorting out compliance, you know, voluntarily sorting out, you know, realizing you have a compliance problem, sorting it out. That is stressful. That’s before you even get into the emotion, the financial cost. And then that’s even before you factor in, you know, the actual financial cost. If penalties can apply or if, you know, you have problems that can be very expensive to sort out.
Toni Sculthorpe: [00:12:27 – 00:12:28]
Yeah, absolutely.
Richard Taylor: [00:12:29 – 00:13:14]
Yeah. So I’m pleased to hear you. You were, you’re able to, to sell to Americans. We’ve, you know, anecdotally I’ve never tried to attract American clients, but my feeling’s always been the accent helps open. People love the accent. But I’ve, I’m not, I’ve never tried to win an American client. So I’m not sure. I’ve always just, I’ve always just lent into the British angle to be fair, because a big part because like You. The stakes just feel higher. The stakes feel higher because there’s these additional landmines, but also something I’ll talk about the end. The stakes feel higher because I think there’s. People come to America to make it so I think there’s like more of an obligation on. As you’ve uprooted yourself and your family, don’t step on avoidable landmines or if you do, diffuse them.
Toni Sculthorpe: [00:13:14 – 00:13:57]
Exactly. And I think that’s the biggest problem with it all is people. I always say people don’t know what they don’t know until they know that they don’t know it. And it’s the education side of it around everything, which is. We’ve been running a expat, what your accountant didn’t tell you expat tax series on Facebook and TikTok at the moment. Things that people don’t know because no one’s ever told them. There’s no, like, when you move to the US there’s no checklist of like, oh, these are the things that you must do. And so people don’t know that they need to report all of their UK bank accounts or how selling a home or property in the UK is going to affect the tax over here and things like that. And it just. If they don’t know, they don’t know, but there’s no one telling them. And a local CPA doesn’t necessarily ask the questions to get that information out of them.
Richard Taylor: [00:13:57 – 00:15:03]
I don’t know how we solve that, Tony, because, you know, obviously this podcast is. It’s a business development tool for the. For my business. But. But it really came from. I was just having the same conversations over and over and over again, one on one. You know, I was spotting the same problems, the same mistakes, the same errors, and they’re totally catchable and totally avoidable in advance. And I just thought, like, how can we get this? You know, you can do webinars, you can do seminars, you do video series. And I thought I could do a podcast where we have these kind of conversations and we get the message out there and people can discover it in their own time and. And learn about this stuff. And as we’re going to talk about in a minute, I mean, I’ve been doing this podcast three years now. This month we’re seeing the same problems that I was seeing five years ago, six years ago. So, you know, you’re putting on TikTok, I’m putting it online. I. And then I think about when someone’s moving here. Yes. There are obviously people who do catch this and take advice. But there are. So you got so many moving parts, it’s still a bit of a crab shoe on whether they’re going to stumble across our content and maybe learn about this stuff in advance. Yeah, I don’t. But I don’t know how else to address it.
Toni Sculthorpe: [00:15:03 – 00:15:15]
Yeah, I agree with you. There isn’t any sort of like One Stop Shop or any like. It’s almost like you need a Moving to America website or checklist and this is all the things that you need to make sure that you’re doing because so many.
Richard Taylor: [00:15:15 – 00:15:15]
That’s an idea.
Toni Sculthorpe: [00:15:16 – 00:15:38]
We have actually got like a tax checklist side of things of like, hey, move in here, make sure you do all these things. But there’s like you said, there’s so many moving parts to it and it’s crazy. But even silly things. When we first moved here, I didn’t actually. This is embarrassing to admit, but I didn’t actually know how to mail a letter out because here I’m guessing it’s the same way you are, but you can go and put it in your letterbox and put the little red flag.
Richard Taylor: [00:15:38 – 00:15:40]
It took me years to learn that. Years.
Toni Sculthorpe: [00:15:41 – 00:15:48]
I was like, I need to. Where’s the post office? Because you haven’t like you don’t see like in the uk you don’t have your red post box and it’s silly things like that that you don’t.
Richard Taylor: [00:15:48 – 00:15:58]
No, Tony. It’s Tony. It took me years. You’ve been, you’ve. You’ve been here four years, you’ve already learned it. It took me longer than that. Yeah. I had no idea. And it’s way more convenient.
Toni Sculthorpe: [00:15:59 – 00:16:00]
Yeah, absolutely.
Richard Taylor: [00:16:00 – 00:16:40]
You know, I’ve actually got a bit of a story on a cautionary tale on taking advice before you come. So there’s a, there’s a. Someone in America now. Successful, very successful chap. But before he moved to America he, he, he went to see a. Oh, he inquired about a consultation with one of these UK US firms he talks about in the uk, one of the more expensive ones and I think they quoted him two or three thousand pounds to do some pre emigrate. Pre leaving. Yeah, you know, pre leaving report. And he bowled at the cost of that. You know, just. No, no way. That’s completely ridiculous. Anyway, moved to America with an isa.
Toni Sculthorpe: [00:16:40 – 00:16:41]
Yeah.
Richard Taylor: [00:16:41 – 00:17:04]
Full of UK funds. Pfix, once here, realized that this was a problem. There was no way out of it other than to surrender them all. Ended up with a 30 or 35, 000 I think pound or dollar tax bill completely avoided had he stumped up that two or three thousand pounds. And also bear in mind there might be other stuff lurking in there that he wasn’t aware of.
Toni Sculthorpe: [00:17:05 – 00:17:05]
Yeah.
Richard Taylor: [00:17:05 – 00:17:27]
And credit to this chap, he completely owned this. And he was like, I just, you know, I look back on that now as, as pennywise pound foolish. He now has a great cross border US UK tax adviser and I’m sure he’s doing everything correctly. But that, that, that is a, a perfect example of, of one of the landmines that people, one of the traps that can fall into.
Toni Sculthorpe: [00:17:27 – 00:17:48]
Yeah, absolutely. And there’s no, there’s nowhere to tell you that. Like it’s not, when you’re going through your interview, immigration and things like that, they don’t sort of like sit down and go, right, okay, have you got any of this stuff? You need to sort this out before or after. So I, I don’t really know like you say, where people can get that information from apart from hopefully us educate. Yeah, yeah.
Richard Taylor: [00:17:48 – 00:17:49]
It’s a worthwhile investment though.
Toni Sculthorpe: [00:17:49 – 00:17:50]
Definitely.
Richard Taylor: [00:17:50 – 00:18:33]
And I also don’t think people listen. I’m guilty of it. I’ve moved twice and I never took advice. It’s only now I’m in America and I’m so immersed in this world of this crazy American cross border world where the, where the stakes are high and the penalties are higher that I realized just how important it is. But you know, I didn’t, I didn’t take advice. But people, I don’t, people don’t understand. Moving to America or becoming connected to America is not like moving anywhere else. It’s not like moving to Dubai or Australia or Canada. Coming to America is uniquely challenging because America has all these additional hoops that we have to jump through and the penalties for getting it wrong are towards Brits. Astronomical. Eye watering.
Toni Sculthorpe: [00:18:33 – 00:19:09]
Yeah. Insane. We have come across so many people that have like moved. They haven’t informed HMRC that they’ve moved. So they’ve just turned up here and they think, okay, I’ve now got a job here, I’ve now got business here, I’ll just start paying tax here. They forget about everything that they have still got any type they’ve got to the uk. Like we’ve had people that have been traveling backwards and forwards and so it’s like been close on residency tax, residency deadlines and things like that. So it’s, there’s so many things that, because they don’t know, they don’t know that they’re doing anything wrong. And like you say the penalties and fines are so extortionate, it’s only when it goes wrong, they then suddenly realize they need to do something about it.
Richard Taylor: [00:19:09 – 00:20:15]
I’m excited to announce that Expat wealth has its first sponsor, the Global Financial Planning Institute. The GFPI exists to provide education, community tools, resources and ongoing research for financial planners and other advanced financial professionals working with international and cross border clients in the US And Americans abroad. I’m a GFP Institute fellow and I’ve put all our employees through their GFPI programs when they join us. I’ve met some great people. I’ve learned a ton. It’s a genuine community of internationally minded folk doing their best to serve their clients properly and critically sharing what they know in the oftentimes challenging and ambiguous US Cross border environment. And as anyone in this sector will tell you, you’re always learning. So if you work with international clients and or Americans abroad, or if this is an area you’re looking to get into, check out the gfpi@www.gfp.in stute you will be glad you did and I hope to see you there soon. So should we talk about some of the common ones? What’s the most common mistake that you’re seeing?
Toni Sculthorpe: [00:20:15 – 00:20:42]
I think one of the worst ones is first of all taking advice from Facebook because no offense to Dave, but we always say as an accountant, there’s always Dave down the pub, he’ll always give you advice on Facebook or down the pub. And so the amount of questions I see on pensions of someone wanting to withdraw or move their UK pension to the US and someone comes along and says, I did this, I did it all tax free or I didn’t report any of this and you’re just like, not right.
Richard Taylor: [00:20:42 – 00:20:48]
It’s the way, it’s the way they say, like there was never any problem with it. No, no, you’ve not been caught yet.
Toni Sculthorpe: [00:20:49 – 00:21:31]
It’s very different. There’s a huge problem with it. But yeah, they’ve just not realized it yet. Yeah, and I think that’s kind of one of my biggest things is just the main thing is everyone’s situation is different because everyone’s assets are different, different visas, different, just scenarios. So you need advice on your specific scenario and situation. And just because someone, even someone in Florida who’s got a UK pension doesn’t necessarily mean they’ve got the same level of income as you. They haven’t got as many assets here. They’ve got different things. So there’s, even though it may look the same, so completely Different. And no one’s going to put all of that on Facebook. So, yeah, that’s my biggest thing that sort of. I stumble across quite a lot, I’d.
Richard Taylor: [00:21:31 – 00:21:45]
Say, off Facebook, because I’m probably a member of some of the same groups you are. And it just took all my self control not to like, not to dive in and it’s counterproductive. A lot of the time no one’s listening, so I just, I just stay away.
Toni Sculthorpe: [00:21:45 – 00:21:59]
Yeah. I think the problem is if, if Dave’s saying I did it all tax free and I had no problem, and then you’re coming along and saying, actually you need to file this, this and this. Yeah, they want to listen to him because it’s, that’s the answer they want.
Richard Taylor: [00:21:59 – 00:22:41]
Yeah, we, we. I, I’ve talked about this in a podcast recently. We had a, an interaction with someone who we passed for another tax advisor. This is before I knew you. And they weren’t reporting their UK pensions on anything, I don’t think. But it also. 3520 3528. Anyway, they were, the tax advisor gave them one answer and they responded, bear in mind, they’re not, they’ve not paid this tax advice or anything. They responded with this huge, huge cop dump from ChatGPT which gave them the answer, which was them saying, which was then they were saying to the tax Advisor, you’re wrong. ChatGPT told me this. Yeah, because you’ve asked it to tell you that. Yes, they got the answer they wanted and they didn’t want to hear anything else.
Toni Sculthorpe: [00:22:41 – 00:23:08]
Yeah. And that is a thing. Sometimes there are some people that you can’t help, but it’s not scaremongering. But I think the problem is people just don’t, don’t realize, don’t understand. The other big one I find is like FBAR reporting the amount of people that don’t realize they’ve got to report foreign bank accounts. And I think they think if they don’t do it, it’s fine because how are the IRS going to know? And they may not straight away, but it will catch up with you. And when you want to move that money across, where’s it come from?
Richard Taylor: [00:23:08 – 00:23:15]
I’m still surprised by how many people are not reporting FBA or are, but aren’t doing on everything.
Toni Sculthorpe: [00:23:16 – 00:23:16]
Yes.
Richard Taylor: [00:23:16 – 00:23:21]
You know, they, they really think it’s just bank accounts. They don’t realize it’s all, it’s all financial accounts.
Toni Sculthorpe: [00:23:21 – 00:23:31]
And the other one that people forget about a lot of I find is like business bank accounts. Or anything that they have a signatory on. They don’t realize that as long as they, if they’ve got, if they can sign on it, they need to report it.
Richard Taylor: [00:23:31 – 00:23:44]
And we get into nitty gritty here. Wait. If you’re a power of attorney for your pet, for your elderly parents, you know, you get power attorney or you become an executor right on their death, you then got signatory authority over all those accounts that is then reportable on fbar.
Toni Sculthorpe: [00:23:44 – 00:23:44]
Yeah.
Richard Taylor: [00:23:44 – 00:24:38]
You know, there’s degrees of it. I wouldn’t, you know, I, I think now everyone should, and I mean should in inverted commas because everyone should know about F bar but it’s because it’s just. And I know everyone doesn’t and it’s not everyone’s fault but it’s just been around. But I think, I think the IRS are losing patience with people not knowing now. No, I don’t think that’s right. I think, I think there should be a, a route to people. People are always not going to know about this. You know, I think about my wife who is completely clueless. Very, very capable, intelligent woman, but leaves everything on this side to me. She, she, she would be completely clueless to all this stuff. Yeah. And it’s not because she’s doing anything nefarious. It’s just because she’s, she just isn’t. This is not her, this is not her thing. So I think people should know about FYI and people need to know that it includes everything now. Not just knowing that it includes business bank accounts, knowing that if you are an executor on your parents estate that it’s going to include that. That’s, that’s a whole other level of. I wouldn’t expect someone to know that.
Toni Sculthorpe: [00:24:38 – 00:25:29]
No, absolutely. And I think obviously a lot of people here do self prepare tax returns but I think even with the software, I think the software now should sort of have some kind of responsibility and other, even if they are using a local cpa, need to be asking more questions. That’s the problem. Some people I think think that I’m really nosy. If you come to us and you want a like review with us. I think we’ve got like a 70 question questionnaire for people to complete and we’ve had people push back on it and say why do you want to know all of these details? And then when I explained to them why they want, why I want to know it, they’ve realized that the complexities that are coming along with it. So a lot of it I think is just the information. The information needs to be out there. And I always say to everybody, give me the full picture. There’s no point telling me just your scenario. When you’re filing jointly with your wife who’s also got UK assets and you’re not telling me about those because they need to be included as well.
Richard Taylor: [00:25:29 – 00:27:53]
Here’s another reason why this is absolutely critical. One of the only ways to get penalties, so we’ve talked penalties for non compliance. People might think, oh, you know what, so what, so what? How big a deal is being in non compliance? Absolutely massive because one, it can leave your returns open forever or part of your returns open forever, so they’re forever under attack. But two, the IRS imposes significant penalties, tens of thousands of dollars, and they do this thing called penalty stacking where they’re like, oh, it’s 10,000 for that and 10,000 for that and 35% for that, and it’ll rack it on top and you get into real, real money, tens, sometimes hundreds of thousands of dollars. And the way to have penalty, one of the ways I believe to have penalty is abated is by asserting reasonable cause. And that’s reasonable cause for making the mistake. And that itself is not a cheap endeavor. You have to pay, I think to do it properly, you’d have to pay an attorney a decent sum to help you craft a reasonable course statement to get penalties abated. But when you’re, I think, I can’t remember what it’s called. But one of the. There’s a test for getting penalties abated for reasonable cause. And that is, it’s a three pronged test. And that’s, did you tell your tax advisor everything you know? So you can’t. If you didn’t tell them about the bank accounts, you can’t, then you can’t then hide behind. I use a tax advisor. So one, did you tell them about it? Okay, number two, is your tax advisor qualified and experienced in this area? So, you know, in our world, if you’re working with a domestic tax adviser, CPA who or ea, who’s got no clue on anything international, is it reasonable to rely on them to understand the intricacies of the UK US tax treaty and how UK pensions are treated, maybe not. Okay, so one, did you tell them. Two, did they, do they have, do they have sufficient experience and expertise to advise you on your situation? And three, did you follow their advice? You know, so if you told them about the bank accounts, but then you, then you didn’t and you told the client to report them, but they didn’t. Well then obviously you can’t rely on that. So relying on a tax, tax advisor is a good defense, is a good claim for reasonable cause, but there’s still conditions to meet. And once you list them out like that, I think they’re fairly, that’s fairly common sense. You know, that makes a lot of sense to me. Yeah, but that’s why it’s so important to work the professional to tell them everything and to follow their advice. And that’s why you have a 70, a 70 point checklist.
Toni Sculthorpe: [00:27:53 – 00:28:39]
Exactly. And I always sort of try and compare it to like if you’ve, if you’re going to a doctor, if you’ve got a heart condition and you’re going to just see a general doctor, he’s not going to know everything necessarily about your heart condition or the surgeon that need. But, and it’s sort of the same with like a general CPA compared to a specialist. Because if you’re just going to sit, they know a lot of the law about a lot of the things, but they don’t necessarily know the detail that you need to go into with certain bits. And so I think that’s just, that’s the thing that most people don’t understand. They think, oh, I’ve just got a CPA or I’ve just got a tax advisor. But like you say, if they’re not, if they don’t know the specific rules and regulations around the UK cross border stuff or the F bar or the pcls or any of that sort of stuff, then they’re not, they’re not gonna be able to advise you correctly.
Richard Taylor: [00:28:44 – 00:28:51]
So Tony, is this, now is this cross border UK using, is this becoming like, is this the main thrust of your practice now?
Toni Sculthorpe: [00:28:52 – 00:29:02]
It’s steering that way for sure. We do still do local tax returns and work with small businesses, but I think a lot of the, the practice is now focused on, on the cross border stuff.
Richard Taylor: [00:29:02 – 00:29:17]
I, I think it’s, this is absolutely critical. I, I’ve, I’ve taught many times in this podcast. I, I think people come to America for the opportunity. Yes, they come to me. I mentioned that before. I think as a Brit. Right. If you’re going for the good life, you go to Europe.
Toni Sculthorpe: [00:29:17 – 00:29:18]
Yeah.
Richard Taylor: [00:29:18 – 00:29:24]
Don’t get me wrong, there’s a wonderful quality of life available to us in America, but Europe is closer, it’s cheaper, it’s easy to get into.
Toni Sculthorpe: [00:29:24 – 00:29:25]
Yep.
Richard Taylor: [00:29:25 – 00:29:55]
You know, and there’s the whole Dolce vita thing, you know, the, the, if you’re going for the good Life. You go to Europe if you’re coming, if you get a tap on the shoulder, if you, within your organization or you get the opportunity to come to America. You’re coming to America because you’re trying to change the quality of your life. You’re trying to. Yeah, I think people are trying to make it, it’s still the land of opportunity, for all its imperfections, it’s still the land of opportunity and people are coming here to try and make it, to try and change the trajectory of their and their family’s lives. And I think that means the stakes are even higher for getting it right.
Toni Sculthorpe: [00:29:55 – 00:29:56]
Absolutely.
Richard Taylor: [00:29:56 – 00:30:24]
And as we’ve talked, there’s just a whole other layer of complexity in the cross border space. The stakes are higher, the complexity is higher and the penalties are higher. And I have argued slam blue in the face, the holy grail for this. The way I think the opportunities can really be maximized is from an expat, in our case a British expat working with a UK US cross border tax advisor, I. Someone like you.
Toni Sculthorpe: [00:30:24 – 00:30:24]
Yep.
Richard Taylor: [00:30:24 – 00:30:59]
And a UK US cross border financial planner, I. E. Someone like us. Yeah, but that’s only, that’s only half the, that’s only half the, the equation. The other part of the equation, this is the one that you never see, even when clients have a tax advisor never see, is that these two, these two people, these two advisors, they need to have a relationship, they need to be meeting to talk about you and you and your, your situation. And there needs to be, first of all, there needs to just be a focus on compliance, getting into compliance, staying in compliance.
Toni Sculthorpe: [00:30:59 – 00:30:59]
Yeah.
Richard Taylor: [00:30:59 – 00:31:12]
And then there needs to be a focus on planning, proactive planning. Your, your planner and your tax advisor working in tandem together, reviewing your situation to minimize your lifetime tax bill. I think that’s a holy grail.
Toni Sculthorpe: [00:31:12 – 00:31:24]
Absolutely. Completely agree with you on that one. The amount of people that I speak to as well that have a separate tax advisor and financial advisor in the UK and the US who have never spoken to each other.
Richard Taylor: [00:31:24 – 00:31:25]
Yes.
Toni Sculthorpe: [00:31:25 – 00:31:49]
See it all the time, working completely separate and independent. And there’s so many areas where they can, if they just work together, they could be so much more tax efficient. They’ve worked all of their lifetime to sort of like build up this, this pot and this wealth and there’s so many things they can do to build on it even further and keep it together if everyone’s on the same page. So yeah, I 100% agree with you. Definitely the holy grail they need to be, everyone needs to be working Together,.
Richard Taylor: [00:31:49 – 00:32:20]
But you never see it. Right. So even when clients, so, so you, when clients have got taxes and this is not just cross border. Right. This is cross border. There’s a whole, I think it’s important to be specific cross border. But this is, this is, you know, you go out to any client out here who’s got a tax advisor and a financial planner. Nine times out of not 10, but you know, 99 out of 100, those, those parties will not, not ever communicate or have any real relationship. The client will pay the tax advisor however much to do their tax prep, which is backward looking.
Toni Sculthorpe: [00:32:20 – 00:32:21]
Yeah.
Richard Taylor: [00:32:21 – 00:33:06]
And the tax. And maybe there’s some communication in that. They, they ask the advisor for historical documents, 1099, that kind of thing. But there is no planning. And that’s, that’s, maybe that’s because, you know, you’re paying the tax advisor to do a job, to do one job, not to do the other job. So there’s no incentive for them to be, to be proactive. In my experience though, because we have, we have a situation, we’re working on something with you now where we are, we are, we’re trying to, we are building this proposition where we have a cross border tax advisor, we have a cross border financial planner and they have, we, we have a, you know, we’re integrated or we’re trying to be integrated and which, and there’s incent. I find tax advisors enjoy the planning aspect of it more because it’s just more rewarding. Right. It’s.
Toni Sculthorpe: [00:33:06 – 00:33:52]
I love it. As sad as it makes me sound. Yeah, I love it. If I can work out and sit down with you, we always, I don’t just ask the question. I’m probably not your normal sort of like accountant and tax advisor because I don’t just sit there and tick the boxes and fill in the boxes. I will sit and have the conversation with you. Like I said, I’m nosy. I’ll find out what you’re doing, what you want to do with your kids, are you sending them to school, like what your plans are. Because that can affect for next year and the year after and the year after. I don’t just want to look back. I want to work with you. I want to be, be a partner and work with you to ensure that you’re getting out of life and especially in America, like you say what you want to get out of it. And I think the financial advice side of that is really important as well, that that brings it all in together. So yeah, I think the thing that we’re hoping to work on together is going to be really, really magical.
Richard Taylor: [00:33:52 – 00:34:17]
Yeah. Get people into compliance, especially people who are nearing retirement. You don’t want to be carrying that into retirement with you. Get people into compliance, tick that box, move forward, and then work on, you know, minimizing your, your lifetime tax bill. Nothing esoteric, nothing crazy, nothing questionable, but just, you know, regular proactive tax planning. That works.
Toni Sculthorpe: [00:34:18 – 00:34:18]
Yeah.
Richard Taylor: [00:34:18 – 00:34:35]
Yeah. Very excited about this. Thank you so much for coming on Expat Wealth. As I said at the beginning, I’m delighted that we’re, we’re in touch. I’m so glad to have found a UK US Tax advisor in America who’s keen on planning. I’m really excited about, about bringing this to people and. Yeah, let’s do this.
Toni Sculthorpe: [00:34:35 – 00:34:36]
Perfect. Look forward to it.
Richard Taylor: [00:34:37 – 00:34:38]
All right. Cheers, Tony.
Toni Sculthorpe: [00:34:38 – 00:34:39]
Thanks for having me on.
Richard Taylor: [00:34:39 – 00:35:37]
All right, folks, that’s another episode of Expat wealth under our belts. Thank you for listening. I appreciate it and I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help ambitious expats thrive in America and ask you to subscribe to the POD wherever you listen and also consider leaving a rating and review, this stuff really does matter. Please help us get this information to the people who need it, that is, to your fellow expats. Just a quick reminder that this show is brought to you by Plan First Wealth. We are a US Based financial planner and wealth manager and we help successful American and international families living across the US to make the most of their opportunity and also ultimately to retire happier. If you’d like to know more about how we might be able to help you, you can find us on our website, www.planfirstwealth.com or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to the podcast guys for their help producing this episode and the entire show. See you next week.
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