Next week sees the publication by HM Treasury of legislation which has already cost the City of London hundreds of millions of pounds and is likely to see the UK financial services industry landed with a massive annual bill for years to come.
The draft legislation will detail how hundreds of UK financial firms from the biggest banks to the smallest broking houses will be expected to implement the United States's Foreign Account Tax Compliance Act (Fatca).
This was brought in by the Obama government in response to the growing number of US citizens who were discovered trying to evade tax by holding bank and wealth accounts overseas. After several high-profile cases involving mainly Swiss banks the US authorities decided to shift the onus for discovering avoidance away from their own law enforcers and whistleblowers to the banks and firms which hold the accounts.
Although the Chancellor, George Osborne, this week hailed Fatca as part of his new armoury of anti-tax evasion tools many people think it is much more of a one-way street with the US gaining far more information on its citizens than the UK might about its.
At the same time preparation for Fatca, which is likely to be enforceable from the start of 2015 but will require reporting on clients' affairs in 2013 and 2014, has seen banks recruit hundreds of highly skilled tax, compliance and IT experts at huge cost.
Fatca will require banks, wealth managers and other account-running firms to report on any of their clients whom they believe to be US citizens with anything over $50,000 (£31,000) in their accounts.
Chris Tragheim, the lead Fatca partner at Deloitte, said: " Fatca is definitely a boardroom issue. It sits at the centre of the global exchange of customer information and the financial services industry should expect even more obligations similar to Fatca."
In this country and two others, Denmark and Mexico, where intergovernmental agreements have been signed in recent months, reporting will go to the local tax authority: in the UK, HMRC. Another 50 or so countries are reported to be preparing to sign such intergovernmental agreements. But for countries which remain outside such cover the local branches of banks and fund managers may be forced to report their clients' accounts direct to the US Internal Revenue Service.
Failure to comply, or perhaps even get the mechanics right, will carry a heavy burden, with the US threatening to tax at 30 per cent any remittances to a so-called "foreign financial institution" from assets in the US. In other words a London firm which holds IBM shares but fails Fatca could see 30 per cent of the dividend removed at source and the same if it chose to sell the shares.
The Association of Private Clients Investment Managers and Stockbrokers' director of operations, Andy Thompson, said: " Fatca places huge cost and administrative burdens on the UK financial services industry. For the vast majority of UK private-client stockbrokers and investment managers, who are UK based with a predominantly UK client base, the impact is made worse given that the number of US persons who will be reportable is likely to be virtually nil but will still require firms to make the checks. Whilst the work of the UK Government to reduce the burden is very much welcomed, Fatca remains a significant cost for absolutely no benefit to UK firms."
The Government has argued that through close co-operation with the US and consultation with the UK financial services industry it has made implementation of Fatca considerably easier than it might have been.
When he signed the intergovernmental agreement in September, David Gauke, the Exchequer Secretary to the Treasury, said: "This agreement demonstrates our commitment to working internationally to tackle tax evasion. It is the first of its kind and represents a significant step forward in the scope and nature of information exchange between governments. Furthermore, the changes we have achieved to Fatca implementation will provide significant benefits to UK financial institutions."
But City professionals remain far from happy.
Simon Culhane, the chief executive of the Chartered Institute for Securities & Investment, which has 40,000 members worldwide, said: "The Americans have slipped in an extraterritorial requirement that will impose significant costs on all asset and investment managers and banks. This US requirement is resulting in a double whammy.
"It is completely extraterritorial and seeks global compliance while imposing significant additional costs of compliance on virtually every financial organisation globally. It has resulted in many financial organisations, including private client and wealth managers, turning away clients simply because they have a link with the US. That strategy alone will not get a financial institution out of the net."
Mr Culhane also highlighted the fact that every foreign financial institution will have to appoint a so-called "responsible person" to implement Fatca and potentially be personally liable for any significant non-compliance. That person will actually be given a US employee identification number.
To kick off the process banks and hundreds of other financial firms are having to run their entire client records through complex computer checks in order to try to identify any US citizens on their books. This includes looking for US addresses, phone numbers and regular payments into accounts in dollars. Once they have identified clients they suspect are US citizens they then have to contact them to decide whether or not this is the case. In some instances this has meant face-to-face interviews. After the start of 2014 the same process will have to be undergone with any new client wishing to open an account, known in the industry as on-boarding, who might be American. This so-called "reasonable check" is expected to go further than current legislation for such things as anti-money laundering. They will apply from the humblest Rhodes scholar wanting a current account in Oxford to the multibillionaire US hedge-fund manager who chooses to live in London.
"It is a huge exercise just getting ready for Fatca," said one senior executive at one of the UK's largest retail banks. "But it is not just that we will have to report annually from now on while taking even more care whom we allow to open accounts. The potential for cock-ups and errors is phenomenal. We don't want to promote tax evasion but it does appear we are bearing a lot of the Americans' costs for them."
Until the draft legislation is published next week many in the City still remain unconvinced that their firms will be legally entitled to withhold tax for the IRS on the clients' accounts or, indeed, that they will not be in breach of data protection laws. The Treasury believes it has addressed all these issues.
Deloitte's Mr Tragheim said: " Fatca represents a massive change. Client records will need to checked, new on-boarding procedures introduced and details reported to regulators. It's a giant step with regard to increasing cross-border exchange of customer information. It's difficult to see how the juggernaut will stop."