Meghan Markle and Prince Harry told whether IRS will gain access to royal finances

We will use your email address only for sending you newsletters. Please see our Privacy Notice for details of your data protection rights.

The Internal Revenue Service (IRS) is the US’ equivalent of Her Majesty’s Revenue and Customs (HMRC) and discussions over the Duke and Duchess of Sussex’s move across the pond have led to questions of whether Meghan and Harry may act as a gateway for the IRS into viewing royal finances. However, tax expert David Lesperance insisted there is no way the IRS would be able to look at the finances of royals like Prince Charles, even if he is bankrolling Harry, and branded the idea “bulls***”. Indeed, they will not even be allowed access to Harry’s finances unless he becomes a US person for tax purposes, either by Meghan sponsoring him for a green card or by coming in on a visa and staying long enough to pass the substantial presence test.

However, the presumption raised by the substantial presence test can still be overcome by certain rules in the US-UK tax treaty.

However, Meghan, as a US citizen, is automatically a US person for tax purposes.

Mr Lesperance said: “The first thing is, what do they have a right to look at? They have a right to look at US source income.

“Likewise, unless Harry becomes a US person for tax purposes, the IRS does not have any ability to look at his finances.

READ  MORE: Archie could get MILLIONS of tax-free money from Harry

“Say for the moment he becomes a US person for tax purposes and his father takes money out of his trust and gives him £1million?

“Does the IRS have the power to look at Dad’s trusts? The answer is no, absolutely not.”

Through the SWIFT banking system, the authorities will know if Harry has received money into a US bank account.

However, if the money has come from Duchy of Cornwall coffers or Charles’ personal wealth, Harry will just be able to inform them that it was a gift from his father and so is not to be included in his taxable income.

Mr Lesperence said: “The IRS is going to say, ‘Harry, we know that there’s a £1million that was deposited in your account last Monday, can you please explain this?’

“Ok, then it’s for him to say, ‘that wasn’t income from me giving a speech for some company or charity or whatever, that was a gift from my father.’

“The US says ‘we don’t tax gifts, so you don’t have to include that in Harry’s taxable income for that year’.

“They certainly have no right to start finding out whether the giver gave it from a trust or a personal account or gold coins he fled up in his backyard, it doesn’t matter!

DON’T MISS
Bizarre rule means no one can be arrested in Queen’s royal residences [REVEALED]
Royal bombshell: How monarch ‘refused to give royal assent to laws’ [ARCHIVE]
Anne given ‘minimum fuss’ to remarry amid Charles and Diana tragedy [INSIGHT]

“There is no power to do that, so this whole idea that Meghan is going to open up a can of worms is bulls***, it’s complete and utter bulls***.

“If the IRS has the right to look, they look hard and they are serious characters, but they don’t have a right to look beyond what they’ve been told to look at.”

However, the IRS does have certain powers to access the finances of Meghan and her son Archie, when he is older, as they are both US citizens and therefore taxpayers on their worldwide income.

For example, they are subject to the Report of Foreign Bank and Financial Accounts (FBAR), which means they have to declare their non-US bank accounts containing over $10,000 (£7742).

This means that when Meghan was living in the UK, if she had a UK bank account, she would have needed to provide certain details to the IRS.

US citizens are taxed on their worldwide income, meaning they have to fill out a tax reform even if they live and work in the UK.

However, a US tax treaty with the UK means that Foreign Earned Income can just be written off as tax credits to the IRS, and then paid in the UK.

Mr Lesperance said he thinks it is unlikely that Harry will be on a green card in the US, as that would automatically make him a US person for tax purposes.

To find out details of coronavirus in your area, please fill in your postcode below.

He explained that the most likely option was that he is on an O-visa, which is given to individuals with extraordinary ability or achievement in their field.

The main achievement Harry could argue that he deserves this visa is the Invictus Games, a Paralympic-style sporting event he founded and runs, in which injured or sick armed forces personnel and veterans compete.

This way, he would be able to be a US person for tax purposes one year, and then a UK taxpayer another year, depending on his activity.

Source: Read Full Article