American citizens like Boris must pay more tax, says US ambassador to UK (but Google and Amazon are doing nothing wrong)

Ambassador to London Matthew Barzun says US citizens must pay up

Boris Johnson was born in New York so faces a tax bill in America

London Mayor has branded the Transatlantic rules ‘outrageous’

Barzun defends US firms like Amazon and Google over tax dodging

Insists they are just playing by the rules written by British government

Insists the US ‘selfishly’ wants Britain to remain in the European Union

American citizens must pay their fair share of tax, the US ambassador to London warned today as Boris Johnson refuses to hand over more than £100,000.

The American-born Mayor of London has said it is outrageous that the taxman in the US is chasing him for unpaid bill worth hundreds of thousands of dollars.

Matthew Barzun, the White House’s man in London, today defended the rules, insisting people who enjoy the benefits of being a US citizen must ‘pay your fair share in taxes’.

But he also leapt to the defence of US firms like Google, Facebook and Amazon, insisting they were doing nothing wrong by avoiding pay tax in the UK but were just ‘playing by the rules’.

Mr Johnson was born in New York and has an American passport as well as a British one.

The law means that American citizens must pay income tax to US authorities if they earn more than £62,000.

The can also be taxed on capital gains on selling a main house made anywhere in the world.

Rejecting the demands, Mr Johnson said: ‘I think it’s outrageous! No is the answer. Why should I?’

But today Mr Barzun insisted that all Americans must pay their share, wherever they live.

Speaking to a press gallery event in Parliament, he told journalists that he would not discuss Mr Johnson’s tax affairs.

He said: ‘If you are an American citizen we have the Privacy Act where we as government officials don’t talk about you or your tax or health or your other information without your express consent.

‘I won’t comment on a specific American citizen and their status because of that.’

But he made clear that any US citizen had to pay the tax that is due. He added: ‘Look, I mean we have our rules and we expect people to play by them.

‘And if you get the benefits of being an American citizen you pay your fair share in taxes.’

However, he defended US companies who have been accused of using international law and cross-borders deals to avoid tax bills in Britain.

Asked if US companies Amazon, Google and Facebook are ‘international tax dodgers’, Mr Barzun replied sharply: ‘No.’

He went on to insist that the tax rules are set by national governments which they then apply legally.

‘I’m not the spokesman for any of those great American companies.

‘These companies and other companies who do work are clever about using international, the rules that exist, as written by the way by all of us: that’s US government British government, we make these rules and they are playing by them.

‘And I hope that if and when rules change they will play by those new rules as well.’

Last month, on a visit to New York, Mr Johnson revealed that he was refusing to pay a tax bill on the sale of his house in London.

In an NPR interview designed to promote his new book, he said he was subject to Uncle Sam’s ‘global taxation’ policy.

He claimed he was facing a bill on the profits made from selling his first home in London, which is exempt from tax in the UK, but would be taxed in the US.

It is thought he made around £720,000 on the sale. The relevant tax for 2009 sales was 15 per cent, which would give him a total bill of almost £110,000.

Mr Johnson said: ‘The great United States of America does have some pretty tough rules, you know.

‘You may not believe this but if you’re an American citizen, America exercises this incredible doctrine of global taxation…’

‘Even though tax rates in the UK are far higher and I’m Mayor of London – I pay all my tax in the UK and so I pay a much higher proportion of my income in tax than I would if I lived in America – the United States comes after me…’

‘Would you believe it? For capital gains tax on the sale of your first residence, which is not taxable in Britain, but they’re trying to hit me with some bill. Can you believe it?’

When asked whether he would pay up anyway, Johnson replied: ‘I think it’s outrageous! No is the answer. Why should I?

‘I haven’t lived in the United States for, you know, well, since I was five years old. I could [afford the bill] – but I pay the lion’s share of my tax. I pay my taxes to the full in the United Kingdom where I live and work.’

The IRS rules state: ‘If you are a US citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad.

‘Your worldwide income is subject to US income tax, regardless of where you reside.’

However, Mr Johnson has made his own demands for the US Embassy in London to pay the congestion charge.

Latest figures suggest Mr Barzun’s embassy owes more than £8million for driving officials and dignitaries around London.

But Mr Barzun made clear he will continue to refuse to pay up, citing rules which allow embassies to avoid paying tax which would affect business operating in host countries.