V.I UNILATERAL RECOMMENDATIONS

recommendations amount to a strategy based on multilateralism, reciprocity, transparency and privacy, as well as attention to the historical role played by Britain in the development of offshore.

V.I UNILATERAL RECOMMENDATIONS

i. A British FACTA?

As already suggested, FATCA has been a significant development in the recent history of policy interventions to curb tax evasion. Since its legal inception in 2010, the Foreign Account Tax Compliance Act has had some success in reducing tax evasive practices by US companies and individuals: in many ways, the price of implementing its onerous reporting standards has become the ‘cost of doing business’ with the US.

Should the UK pursue its own ‘British FATCA’ as a way to curb tax evasion by domestic taxpayers and companies? Our previous analysis suggests that it should not. From a purely economic perspective, the withholding tax penalty on US-based income for non-compliance has successfully incentivised foreign firms to bear the large costs of FATCA implementation.269 However, the benefits of access to UK-based income is not as great as access to the much larger US market. Indeed, demand for access to the UK has – and is likely be to further - lessened by Britain’s exit from the EU.

It could be argued that implementation costs will not be as great for a British FATCA, since foreign firms have already created the necessary infrastructure to comply with the US FATCA.

269 David L Brumbaugh, ‘Farm Legislation and Taxes in the 110th’ (Every CRS Report, 22 January 2008) www.everycrsreport.com/reports/RS22759.html accessed 18 August 2020; Herbert Smith Freehills LLP, ‘The Cost of Complying with FATCA’ (Lexology, 3 June 2013) www.lexology.com/library/detail.aspx?g=a74e2969-7fe3-4931-999b-7caaf60c5588 accessed 20 August

2020.