by Ariful | Sep 16, 2026 | UK Updates
TITLE: EU Customs Reform, UK VAT Changes and ViDA: Deadlines Cross-Border Sellers Must Track
Deadlines and changes to track
- 14–15 September 2026: EU customs reform advanced through Parliament, and the Council’s first-reading position was published in the Official Journal as Position (EU) No 10/2026. Final signature and publication of the completed legislation are still pending.
- 1 October 2026: Qualifying domestic electricity supplies in Great Britain move temporarily from 5% VAT to 0%.
- 31 December 2026: Transitional UK VAT group refund claims for VAT incurred between 1 July 2025 and 30 June 2026 must be submitted.
- 1 January 2027: The first ViDA OSS and IOSS changes apply.
- 1 November 2026 at the latest: The EU-wide small-parcel handling fee is scheduled to apply. The amount is not yet fixed.
- 1 July 2028: EU ecommerce operators must begin using the Customs Data Hub under the new timetable.
- October 2028 at the latest: The UK plans to remove the £135 low-value import customs duty relief.
Cross-border compliance is moving quickly. This week brings major EU customs reform progress, a temporary UK electricity VAT cut, new VAT refund procedures, and a shorter runway to the first ViDA changes. Use this edition to identify the deadlines that affect your sales channels, import flows, VAT registrations, and reporting systems.
1. Prepare for the EU Customs Data Hub and platform importer rules
The European Parliament approved the Council’s position on the recast Union Customs Code on 14 September 2026. The Council’s first-reading position was published in the Official Journal on 15 September as Position (EU) No 10/2026.
The reform will repeal Regulation (EU) No 952/2013 and create:
- An EU Customs Data Hub.
- A European Union Customs Authority based in Lille, France.
- A new Trust and Check trader status.
- Updated customs responsibilities for non-EU ecommerce platforms and distance-sale operators.
- A new EU-wide handling fee for small parcels.
Operations for the new customs authority are expected from 2027. However, the final legislative signature and completed publication remain pending. Treat the current position as a confirmed direction of travel, not as the final operational rulebook.
The most important change for online sellers is responsibility. Non-EU ecommerce platforms and distance-sale operators will be treated as importers for relevant transactions. They will be responsible for customs formalities and duty payments.
The Customs Data Hub will become mandatory:
- For ecommerce operators from 1 July 2028.
- For all traders from 1 March 2034.
Trust and Check status will reward traders that share reliable data in real time. Authorised Economic Operator status will remain available.
Read the European Parliament update on the Union Customs Code and the Council’s reform announcement.
Act now if you sell through Amazon, Shopify or another platform
Review your import model before the new systems become mandatory.
Check:
- Who is currently listed as importer of record.
- Who pays customs duty and import VAT.
- Whether your platform collects VAT but leaves customs obligations with you.
- Whether your product, origin, commodity code and value data are complete.
- Whether your fulfilment partner can provide shipment-level customs records.
A UK brand using Amazon FBA in Germany, France or Spain may currently view Amazon as only a sales channel. Under the new framework, the platform or distance-sale operator may carry wider importer responsibilities. Your contracts, data flows and VAT records must reflect the actual transaction structure.
2. Apply the UK electricity VAT cut correctly
The Value Added Tax (Supplies of Domestic Electricity) Order 2026 introduces a temporary 0% VAT rate for qualifying domestic electricity supplies in Great Britain.
The rate applies from 1 October 2026 to 31 March 2027.
Northern Ireland remains at the 5% reduced rate.
Qualifying use includes:
- Domestic use in homes.
- Certain residential settings.
- Supplies within the de minimis rules.
- Non-business use by eligible charities.
The measure affects approximately 100 electricity suppliers. Businesses receiving qualifying supplies will not normally need to change their VAT returns simply because the supplier applies the new rate. However, suppliers must update billing systems, tax codes and invoice processes.
Billing periods that cross 1 October need particular care. HMRC Revenue and Customs Brief 10 (2026) explains that suppliers may determine VAT liability by the date of consumption. Meter readings are recommended.
Protect your billing records
If your business receives qualifying electricity, keep:
- The supplier invoice.
- Meter readings around 1 October.
- Evidence of domestic or qualifying use where relevant.
- Records showing how any business and non-business use was calculated.
Read the HMRC guidance on the temporary zero rate and the updated VAT Notice 701/19 on fuel and power.
3. Submit UK VAT group refund claims through the correct entity
Revenue and Customs Brief 8 (2026), published on 8 September, changes how eligible non-UK businesses in a UK VAT group claim UK VAT refunds.
Each eligible non-UK business that incurred the VAT must submit its own claim. The representative member should not automatically submit the claim on its behalf.
For the transitional period covering VAT incurred between 1 July 2025 and 30 June 2026, claims are due by 31 December 2026.
There is also a route to ask HMRC to reconsider certain claims refused since 1 January 2021. Requests must be made by 31 August 2027.
Review your group records now. Match each invoice to the entity that incurred the VAT. This will reduce rejected claims and prevent cash-flow delays.
4. Get ready for the first ViDA changes
The EU’s VAT in the Digital Age package continues its phased rollout. The first relevant OSS and IOSS changes apply from 1 January 2027.
Commission Implementing Regulation (EU) 2026/1869 sets technical rules for the VAT special schemes. The Commission also published revised OSS Guidelines on 24 July 2026.
The first phase includes:
- OSS expansion for certain B2C supplies of electricity, gas, heating and cooling energy.
- Clarification of the €10,000 threshold.
- Extended deemed-supplier rules, including the “group of four”.
- New identification requirements for VAT groups using OSS or IOSS.
- Confirmation that the SME exemption scheme cannot be used simultaneously with IOSS.
The wider Single VAT Registration reforms follow from 1 July
by Ariful | Sep 15, 2026 | UK Updates
TITLE: October 2026 Compliance Checklist for UK Limited Companies
October 2026 brings several important compliance actions for UK limited companies. Employment tribunal time limits are changing, dividend tax rates apply for the 2026/27 tax year, and several tax deadlines fall during the month.
You should also prepare for Companies House identity verification and the Autumn Budget on 28 October. Use this checklist to organise your records now and avoid rushed filings, missed payments or incomplete documentation.
Start with the October compliance calendar
Add these dates to your finance and payroll calendar:
| Date |
Action |
| 1 October 2026 |
Pay Corporation Tax for the accounting period ended 31 December 2025 |
| 1 October 2026 |
Six-month employment tribunal time limit begins for relevant workplace matters occurring on or after this date |
| 5 October 2026 |
Register for Self Assessment if you have a new obligation for the 2025/26 tax year |
| 22 October 2026 |
Pay PAYE, National Insurance and CIS deductions electronically for the tax month ending 5 October |
| 28 October 2026 |
Autumn Budget 2026 |
| 31 October 2026 |
Submit a paper Self Assessment tax return for 2025/26, if required |
| Around 18 November 2026 |
Expected end of the transition period for existing Companies House directors and PSCs |
Do not leave these actions until the final week. Early preparation gives you time to correct bookkeeping records, confirm payment references and resolve missing information.
Keep stronger HR records as tribunal time limits extend
From 1 October 2026, the standard time limit for most employment tribunal claims increases from three months to six months. The change applies where the relevant workplace issue happens on or after 1 October.
The updated rule covers many common claims, including disputes involving:
- Unfair dismissal
- Discrimination and harassment
- Unauthorised deductions from wages
- Working time
- TUPE
- Breach of contract claims in England and Wales
The existing three-month limit generally continues to apply to issues that happened before 1 October 2026. The position for breach of contract claims in Scotland changes from 9 November 2026. The Acas early conciliation process remains in place.
Read the official employment tribunal time limits guidance and update your internal procedures.
Store records for longer
A longer claim window means you may need to locate evidence several months after an event. Maintain a secure, dated record of:
- Sickness absence and return-to-work discussions
- Payroll changes and deductions
- Disciplinary meetings
- Grievances and investigation notes
- Dismissal decisions and termination letters
- Holiday requests and disputed holiday payments
- Working hours, overtime and rota records
- Emails and written communications relating to workplace issues
Keep the records consistent with your payroll and accounting system. For example, if an employee disputes a deduction, your payroll report, payslip, bank payment and written explanation should tell the same story.
Also review your staff handbook and template letters. Replace references to a three-month tribunal period where appropriate. Clear documentation will help you respond confidently if a former employee raises a concern later.
Record every dividend decision correctly
The dividend rates for the 2026/27 tax year are:
- 10.75% for taxpayers in the basic rate band
- 35.75% for taxpayers in the higher rate band
- 39.35% for taxpayers in the additional rate band
- £500 dividend allowance
The dividend allowance is not a separate tax band. Dividends above the allowance are taxed according to the shareholder’s overall income position. Shareholders may need to report dividend income through Self Assessment.
The official HMRC dividend tax guidance explains how the rates apply from 6 April 2026 to 5 April 2027.
Maintain a complete dividend file
Before declaring a dividend, check that the company has sufficient distributable profits. Then retain:
- Board minutes or a written board resolution
- The dividend declaration date
- The amount paid to each shareholder
- Dividend vouchers
- Evidence of the bank payments
- Updated director loan account records, where relevant
Do not treat a personal withdrawal as a dividend simply because it has been paid from the company bank account. Missing paperwork can make the transaction difficult to support and may create problems in your company accounts or the shareholder’s tax return.
This is also a useful time to review your salary and dividend mix. Consider the company’s cash flow, payroll costs, available profits and the shareholder’s expected personal tax position. Your records should show what was decided and why the payment was made.
Pay the October Corporation Tax deadline
If your company’s accounting period ended on 31 December 2025, Corporation Tax is due on 1 October 2026.
This is the payment deadline. It is separate from the deadline for filing the Company Tax Return. Check that your accounting records are complete before calculating the liability.
Reconcile:
- Shopify, Stripe, PayPal and other payment accounts
- Business bank accounts and credit cards
- Sales invoices and refunds
- Stock purchases and inventory movements
- Payroll and pension costs
- VAT returns and VAT control accounts
- Director loan accounts
- Accrued expenses and prepayments
For context, the current Corporation Tax rules provide a 25% main rate, a 19% small profits rate for qualifying profits of £50,000 or less, and Marginal Relief between the relevant profit thresholds. Read the latest Corporation Tax rates guidance before finalising your calculation.
Pay electronically with enough time for the payment to reach HMRC. A late payment may lead to interest and penalties.
Complete payroll and CIS checks before 22 October
PAYE, National Insurance and CIS deductions for the tax month ending 5 October 2026 are due electronically by 22 October 2026.
Before submitting or paying, reconcile your payroll reports to:
- Employee gross pay and deductions
- Employer National Insurance
- Pension contributions
- Statutory payments
- Benefits and expenses processed through payroll
- CIS deductions and subcontractor records, if applicable
- The payroll bank payment
Check your employee rates as part of the review. The official National Minimum Wage rates show the rates applying from April 2026, including £12.71 per hour for workers aged 21 and over and £10.85 for workers aged 18 to 20.
A payroll reconciliation protects cash
by Ariful | Sep 15, 2026 | UK Updates
Australia’s tax compliance landscape is changing quickly. Today’s key developments affect foreign investors in Australia, Australian businesses making cross-border payments, software and SaaS users, and employers preparing their September lodgments.
The biggest development is the passage of foreign resident Capital Gains Tax reforms. The Bill is awaiting Royal Assent, so you should monitor the commencement date before completing transactions involving Australian land, infrastructure or renewable energy assets.
1. Prepare for foreign resident CGT reforms after Parliament passes the Bill
The Treasury Laws Amendment (Strengthening Accountability for Tax Adviser Misconduct and Other Measures) Bill 2026 passed both Houses of Parliament on 10 September 2026. It is now awaiting Royal Assent.
According to the Treasury Ministers’ media release, the reforms will bring the Australian CGT treatment of foreign residents closer to the OECD Model Rules.
The changes are expected to commence on the first 1 January, 1 April, 1 July or 1 October after Royal Assent. If Royal Assent occurs before 1 October 2026, the expected commencement date will be 1 October 2026.
For foreign investors in Australia, the reforms will significantly expand the assets that may fall within taxable Australian real property, or TARP.
The expanded definition will cover:
- Interests and rights over Australian land.
- Contractual and personal rights connected with Australian land.
- Fixed or installed infrastructure, regardless of how a State or Territory classifies the asset.
- Solar panels, wind turbines, batteries and transmission lines.
- Data centres, mining plant and equipment, and gas pipelines.
- Leases, licences and contractual rights over covered assets.
- Water entitlements.
- Options and rights to acquire covered real property.
Mining, quarrying and prospecting information will also be included when testing the value of the principal asset.
Review the 365-day principal asset test
The principal asset test will apply where an entity met the test at any time during the 365 days before the CGT event.
This means you should not assess an asset only on the date of sale. A company may still fall within the regime if it previously met the principal asset test during the relevant look-back period.
Review transactions involving Australian land-rich companies, infrastructure groups and entities with significant natural resource interests. This applies whether the business operates from Sydney, Melbourne, Brisbane, Perth, Adelaide, Canberra or another Australian location.
Prepare for new vendor notification rules
For non-indirect Australian real property interest transactions of $50 million or more, foreign resident vendors will need to notify the ATO:
- At least 28 days before completion where more than 31 days exist between signing and completion.
- As soon as reasonably practicable in other cases.
If the vendor does not provide a valid notification, the vendor declaration will be invalid. The purchaser must then withhold 15%.
The purchaser knowledge test will also move from a subjective standard to an objective standard. Non-compliance penalties will start at $7.5 million.
These changes make transaction records, valuation evidence, contracts and completion timetables critical. Keep a clear audit trail so your business can demonstrate how it assessed the asset and withholding requirements.
Check the renewable energy concession
The final Bill includes a 50% transitional CGT discount for eligible Australian renewable energy assets. The concession applies to CGT events from commencement until 30 June 2040, extending the earlier proposed end date of 2030.
The concession can also apply to indirect interests where renewable energy assets represent at least three times the value of other TARP assets.
The final reforms apply prospectively to CGT events occurring on or after commencement. Earlier concerns about broader retrospectivity were removed from the final version.
2. Review offshore software and SaaS payments before the next remittance
The ATO has finalised TR 2026/2, which addresses when software-related payments are royalties for Australian tax purposes.
The ATO also released draft PCG 2026/D4. Consultation closes on 2 October 2026.
The ruling is particularly important for Australian businesses paying overseas software, cloud, platform, licensing or distribution providers. A payment may attract royalty withholding tax where it relates to the use of copyright or other intellectual property rights.
The practical question is not simply whether you call an arrangement “SaaS” or “software access”. You should examine:
- What rights the contract grants.
- Whether the Australian payer can use, reproduce, modify or distribute software.
- Whether copyright or other intellectual property rights are involved.
- Whether support, hosting and licensing are bundled.
- Where the software owner and payment recipient are resident.
- Whether a tax treaty changes the withholding outcome.
International pushback is growing. The US Treasury objected during the consultation process. The Washington-based National Foreign Trade Council has said the ATO position runs against international tax norms. The White House has also warned trading partners against introducing new taxes on US technology companies.
Reporting by The Conversation noted that Apple, Microsoft and Amazon reported combined Australian income of almost A$30 billion in 2023–24, with combined tax payable of approximately A$478 million. The ATO’s position could increase royalty withholding tax exposure for some cross-border software payments, and further litigation is possible.
The ATO has also published a decision impact statement on Oracle Corporation Australia Pty Ltd v Commissioner of Taxation [2025] FCAFC 145. The statement highlights the importance of preserving Mutual Agreement Procedure rights where a payment may be taxed in more than one country.
Action point: Build a payment register for all overseas software, cloud and platform suppliers. Flag higher-risk agreements before the next payment. This will help you identify withholding obligations and reduce the risk of historic reporting gaps.
3. Lodge the PAYGW annual report by 31 October
The ATO updated its PAYG withholding annual report guidance on 11 September 2026. A new completion guide was published on 4 September.
The PAYG withholding from interest, dividend and royalty payments paid to non-residents annual report, known as NAT 7187, covers the period from 1 July 2025 to 30 June 2026.
The lodgment deadline is 31 October 2026.
Use NAT 7187 to report relevant:
- Interest payments to non-residents.
- Unfranked dividends paid to non-residents.
- Royalty payments to non-residents.
- Amounts withheld from those payments.
If interest or dividend amo
by Ariful | Sep 15, 2026 | USA Accounting
TITLE: FinCEN BOI Reporting Ends for US Companies: What International Sellers Must Still File
Stop BOI filings for domestic US companies
Domestic US companies are now exempt from CTA BOI reporting.
This includes entities formed under US state or tribal law, such as:
- US single-member LLCs
- US corporations
- US partnerships
- Other domestic entities created by filing formation documents with a US authority
Under the final rule, these entities no longer need to:
- File an initial BOI report
- Submit BOI updates
- Correct previously filed BOI information
- Report their beneficial owners or company applicants to FinCEN
US persons also receive broad relief. They no longer need to provide BOI to reporting companies when they are beneficial owners or company applicants. US persons with FinCEN IDs do not need to update or correct the information previously submitted for those IDs.
The rule is effective from 14 August 2026. Read the official FinCEN BOI guidance for the current position.
Understand why the relief is not universal
The exemption applies to domestic US companies. It does not cover every foreign business operating in the United States.
A foreign company can still be a reporting company if it:
- Was formed under the law of a foreign country; and
- Registers to do business in a US state or tribal jurisdiction by filing with a secretary of state or similar authority.
For example, a UK company, Canadian corporation, or Australian company registering to trade directly in a US state may remain within the BOI reporting rules.
A foreign reporting company must generally file its initial BOI report within 30 calendar days of the earlier of:
- Receiving actual notice that its registration is effective; or
- The state or tribal authority first providing public notice of the registration.
The report must identify the foreign company and its relevant foreign beneficial owners. It no longer needs to report US-person beneficial owners or US-person company applicants.
Non-US company applicants may still need to be reported where the rules require that information.
Review the FinCEN final rule Q&A before assuming your business is exempt.
Let FinCEN handle the data purge
FinCEN plans to remove previously submitted information relating to domestic US companies and US persons from its BOI system.
The agency expects to complete this through a one-time database sweep. You do not need to submit a deletion request or contact FinCEN to remove the information.
FinCEN also does not plan to provide individual deletion confirmations. It will publish a public notice when the deletion process is complete.
This administrative purge does not affect other federal or state records. Your IRS filings, state registrations, sales tax accounts, banking records, and accounting documents remain separate.
Keep Form 5472 on your compliance calendar
The most important warning for international sellers is simple:
FinCEN BOI relief does not remove IRS Form 5472 obligations.
A foreign-owned US single-member LLC that is treated as a disregarded entity may still need to file Form 5472 when it has reportable transactions.
The LLC generally files:
- Form 5472; and
- A pro forma Form 1120 attached to the filing.
The form is normally due by the deadline, including extensions, for the pro forma Form 1120. A foreign-owned US disregarded entity does not usually file a standard income tax return simply because it has a Form 5472 obligation. However, it must still follow the IRS filing process for Form 5472.
Reportable activity may include transactions with the foreign owner or related parties, such as:
- Capital contributions
- Distributions
- Loans
- Payments for services
- Reimbursements
- Certain formation or acquisition transactions
- Other monetary, non-monetary, or less-than-full-consideration transactions
Check the IRS Form 5472 instructions and the IRS Form 5472 information page to confirm the filing requirement.
Avoid the $25,000 Form 5472 penalty
The IRS can assess a $25,000 penalty for each failure to file a complete and correct Form 5472 on time.
The same penalty can apply where required records are not maintained.
If the failure continues for more than 90 days after the IRS sends a notice, an additional $25,000 penalty may apply for each 30-day period, or part of a 30-day period, after that 90-day period ends.
There is no maximum penalty amount for Form 5472 failures.
That means a missed filing can become increasingly expensive. The penalty is separate from any FinCEN BOI consequences and is administered by the IRS.
The IRS international information reporting penalties guidance confirms the current penalty structure.
Check state-level reporting separately
Federal BOI relief does not override state reporting rules.
New York’s LLC Transparency Act took effect on 1 January 2026. It applies to certain non-US LLCs formed under foreign-country law and authorised to do business in New York.
A qualifying foreign LLC may need to submit beneficial ownership information to the New York Department of State. Some exempt entities may still need to file an exemption attestation.
The New York requirements are separate from FinCEN reporting. Therefore, a foreign business can be:
- Exempt from federal FinCEN BOI reporting; but
- Still required to file a New York disclosure or exemption attestation.
Review the New York Department of State beneficial owner disclosure guidance if your foreign company is registered in New York.
Other states may introduce similar requirements. Always check the state where your entity is formed or registered.
Apply the rules to a UK seller with a US LLC
Consider a UK ecommerce seller that owns a US single-member LLC.
If the LLC was formed under US state law:
- It is exempt from FinCEN BOI reporting.
- It does not need to file BOI updates or corrections.
- The UK owner does not need to report BOI to FinCEN through that domestic LLC.
- The LLC may still need to file Form 5472 with a pro forma Form 1120 if reportable transactions occurred.
Now consider a different structure. The UK company itself registers to do business in New York as a foreign entity.
In that case:
- The UK company may remain a FinCEN reporting company.
- It may need to file its initial BOI report within 30 calendar days of registration becoming effective or public notice, whichever is earlier.
- It may also need to comply with New York’s beneficial ownership disclosure rules.
Separate FinCEN relief from IRS and state duties
The FinCEN final rule effective 14 August 2026 removes a significant layer of federal reporting for domestic US companies and US persons. For international sellers, the practical effect is narrower than it first appears.
Three duties remain distinct and must be handled separately:
- FinCEN BOI reporting — gone for domestic US entities, still live for many foreign companies registered in the US.
- IRS Form 5472 — unaffected by the FinCEN rule, with a starting penalty of $25,000 per failure and no cap.
- State-level disclosure — such as New York’s LLC Transparency Act, which operates independently of federal rules.
Confirm your entity’s status, check your filing calendar, and verify each obligation against the official guidance before the next deadline.
by Ariful | Sep 14, 2026 | US Updates
TITLE: The IRS Has Quietly Removed Its FBAR Penalty Reassurance — What UK-Based Founders Need to Know
What the IRS changed in September 2026
The IRS FBAR page now states that:
Filing an FBAR late or not at all is a violation and may subject you to penalties.
It also advises taxpayers who have not been contacted by the IRS and are not under investigation to file late FBARs as soon as possible to minimise potential penalties.
This replaces the clearer public-facing assurance previously associated with the Delinquent FBAR Submission Procedures. That earlier language stated that certain taxpayers would not face a penalty where they:
- Properly reported the income from the foreign account.
- Paid the associated US tax.
- Had not been contacted by the IRS about the relevant years.
The removal does not change the FBAR filing obligation or the statutory penalty framework. It does mean you should no longer treat the previous public assurance as an automatic, programme-based protection.
The current IRS FBAR guidance now places greater emphasis on prompt filing, accurate records, and the facts surrounding each case.
The FBAR requirement remains unchanged
You generally need to file FinCEN Form 114, commonly called an FBAR, when all of the following apply:
- You are a US person.
- You have a financial interest in, or signature authority over, at least one foreign financial account.
- The combined maximum value of those accounts exceeded $10,000 at any time during the calendar year.
A US person can include:
- A US citizen.
- A US resident for FBAR purposes.
- A corporation formed in the United States.
- A partnership or LLC created under US law.
- Certain trusts and estates.
The account does not need to generate taxable income to be reportable. This is important. Reporting the income on your US tax return does not remove the separate FBAR obligation.
You must file the FBAR electronically through the FinCEN BSA E-Filing System. It is not filed with your federal income tax return.
Key FBAR deadlines for international sellers
The standard FBAR deadline is April 15 following the calendar year being reported.
An automatic extension runs until October 15. You do not need to request this extension.
For example:
- The 2025 FBAR was due on April 15, 2026.
- The automatic extended deadline is October 15, 2026.
- A complete filing after October 15 may be considered late.
Special disaster relief notices or limited extensions for specific categories of filers can apply. Always check the latest IRS and FinCEN notices before relying on a different deadline.
If you have not filed a required 2025 FBAR and are not under IRS contact, civil examination, or criminal investigation, act before the October deadline where possible.
Why this matters to UK-based US LLC owners
A US LLC is generally a US entity for FBAR purposes. Its federal income tax classification does not automatically remove its reporting obligations.
Consider this example.
Example 1: US LLC with a UK bank account
A UK-based founder owns a Delaware LLC. The LLC receives ecommerce revenue into a UK business bank account before transferring funds to its US payment processor.
If the LLC had a financial interest in the UK account and the combined maximum value of its foreign accounts exceeded $10,000 during the year, the LLC may have an FBAR filing obligation.
The founder is not automatically required to file a personal FBAR simply because they own the LLC. Their personal obligation depends on their own status as a US person and their personal interest or authority over reportable accounts.
This distinction matters. Review the entity and the individual separately.
Example 2: US citizen living in the UK
A US citizen lives in Manchester and sells products through Amazon and Shopify. They use UK bank accounts to receive or hold business funds.
If the person is a US person and the maximum combined value of reportable foreign accounts exceeded $10,000 during the year, an FBAR may be required. This can apply even if the person has already included the business income on their US tax return and paid the relevant tax.
Example 3: Multiple accounts below $10,000
A US-based ecommerce company has:
- A Canadian account with a maximum balance of $6,500.
- A UK account with a maximum balance of $4,000.
- An Australian account with a maximum balance of $2,000.
No single account exceeds $10,000. However, the combined maximum values exceed the threshold. The aggregate test may therefore create an FBAR filing obligation.
Penalties are possible, but not automatic
The IRS states that civil penalties depend on the facts and circumstances. The main categories are:
- Non-willful violations: The statutory maximum is $10,000 per violation, adjusted for inflation.
- Willful violations: The statutory framework allows a penalty up to the greater of an inflation-adjusted $100,000 or 50% of the account balance at the time of the violation.
- Criminal violations: Serious cases may involve criminal penalties.
The IRS Internal Revenue Manual confirms that examiners have discretion. They may consider whether a warning letter and corrected filings are sufficient to improve future compliance.
The Internal Revenue Manual also states that a penalty should not be asserted where:
- The failure was not willful.
- The failure was due to reasonable cause.
- Accurate delinquent or amended FBARs are filed.
This is helpful, but it is not the same as a guaranteed penalty exemption. You should document your circumstances rather than rely on a general assumption that tax payment alone resolves the issue.
Follow this action checklist
Use the following checklist if you believe an FBAR may be missing.
1. Identify every relevant US person
Review each individual and entity separately. Include US LLCs, corporations, partnerships, US citizens, and US residents where applicable.
Do not assume that living outside the United States removes the obligation.
2. List every foreign financial account
Include foreign bank, securities, brokerage, and other reportable financial accounts. Consider accounts held in the UK, EU, Canada, Australia, and other countries.
Review accounts connected with:
- Ecommerce operations.
- Marketplace settlements.
- International payment flows.
- Foreign subsidiaries.
- Business reserves.
- Founder or director signature authority.
3. Calculate the maximum annual values
Use the highest value of each account during the calendar year. Then convert the figures into US dollars using the
