Tax & Accounting News

New Crackdown on ‘Overseas’ Residents

07/12/2009

HM Revenue and Customs (HMRC) has set up a new department to scrutinise the affairs of wealthy Britons claiming to have moved overseas, to check they really have severed their ties with the UK.

The high net worth unit, which monitors the tax contributions of the country’s wealthiest 5,000 people, is set to examine their non-residency. Golf club membership, owning a car or even having a mobile phone number in the UK is likely to arouse the department’s suspicion.

Previously an individual’s residency status was primarily determined by the number of days they spent in the UK. In light of HMRC’s revised guidance, the most important consideration now is an individual’s actual links with the UK, rather than the precise amount of days they are in the country.

This follows HMRC’s case against businessman Robert Gaines-Cooper who faced a tax demand of £30million after inspectors challenged his non-residency status, on the grounds that he owned a 27-acre estate and a collection of vintage Rolls-Royces in Oxfordshire, while his son also attended a school in England.

The question of whether someone has severed virtually all ties with the UK is subjective, which is likely to cause a lot of concern among tax exiles, particularly with tax rates for high-earning residents on the rise. With several court cases pending, the new rules may become a little clearer in the coming months and we will of course keep our clients informed.

For more information please contact Martina Fitzgerald.