The HIRE Act, or Hiring Incentives to Restore Employment Act, was covered by almost all media outlets that I could track as a job creation measure, involving the granting of a sort of tax holiday for firms taking on the unemployed. It sounds great, does it not? But a far less remarked part of the bill was the fact that any revenue shortfalls caused by such a temporary tax “holiday” would be paid for by clamping down on tax evasion. It sounds rather glib, like a man promising to buy his family lunch by hunting for any cash that might have fallen down the back of the sofa.

Lawmakers have tacked on a provision in the HIRE Act which will significantly increase the cost to financial institutions of handling the business of US residents living abroad. . In sum, it means that any financial institution – a pretty widely defined term – that does business with US citizens has to comply with an increasingly onerous set of reporting requirements with the Internal Revenue Service. And this is the kicker: even if an institution has no US clients, if they have some investments and financial affairs linked to the US, then that institution comes under the terms of the Act’s provisions.

Cynics might say that such a sweeping extension of the IRS’s powers will in practice prove hard to enforce on the ground, but don’t bet on it not making a serious impact on the welfare of US expats. There are tens of thousands of US citizens living here in London, for example, many of whom work in the wealth management industry. I am hearing anecdotal reports from my sources that US expats are sometimes struggling to find a financial institution that wants to take on their business. Some are being turned down just because they are Americans. It may not be strictly illegal - a firm ought to be able to turn down a client if the custom is not profitable - but this is clearly a most unsatisfactory state of affairs. Last year, WealthBriefing reported that Pershing, part of BNY Mellon, will cease to provide financial custody services where Pershing Nominees is the registered custodian. The soaring cost of obeying US tax codes for US expats is part of the reason for its move, although Pershing, to its credit, says it is doing its utmost to try to ensure clients are not negatively affected. These events happened before HIRE Act became law, so further tightening of the screws is bound to make this situation worse.

A number of wealth management and financial advisory businesses operating in the UK are affected and I understand that several offshore custodians are looking at changing their arrangements. One big financial advisory firm confirmed to me that it had been hit but declined to be identified since it was in the process of contacting clients back when we originally reported the matter. This is, clearly, a touchy matter.

Last week, I contacted the US Embassy, since if US citizens living in a foreign country are in danger of losing access to even basic financial services, this would surely be something that the representative of US citizens living abroad should care about. . Remember, a lot of US citizens have been living in the UK for many years – it is actually quite a difficult process for such a person to surrender US nationality. The Financial Services Authority, meanwhile, has been contacted about the matter, but so far, I have not had a response. And remember that this is not just about US nationals living in the UK; the HIRE Act's impact will affect them wherever they are, such as in the growth markets of the Far East and Latin America.

It may not be the intention of US legislators to penalise hard-working, taxpaying fellow citizens living and working abroad, but that could be one of the HIRE Act’s effects. Already, the US worldwide method of taxation means that there is little incentive for US citizens to work in lower-tax locations. Governments are understandably, keen to stem any outflow of tax revenues. But it is all too easy for legislators to promise to raise a sum of money from “cracking down” on tax “cheats” and the like and then not to think hard about how the fine print of any rules will work in practice.