Expat’s €35m tax hit

LAST UPDATED: 14 Oct, 2010 @ 14:03
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Expat’s €35m tax hit

BRITISH expatriates who still have ties back home could be at the mercy of the taxman, after a Seychelles resident was hammered with a 35m euro tax bill.

Until last year, British expats could claim non-residency status as long as they spent no more than 91 days a year in the UK.

But under new guidance, UK tax authorities are increasing the focus on British citizens living aboard.

New rules require them to prove they do not retain any connections with their native soil.

Businessman Robert Gaines- Cooper, who is based in the Seychelles, was hit with the huge demand.

Despite being resident there since 1976, he was sent a bill corresponding to money earnt between 1993 to 2004.

And although he insists he is a non-resident, the UK Court of Appeal rejected his claim on the basis that taxpayers must show a “distinct break” with the UK.

This means severing all social and family ties.

Unfortunately for Gaines-Cooper he had a house in Henley, his son was at school in the UK, he had a UK mobile phone, his will was drawn up under English law, and he regularly attended Ascot racecourse.

In the court’s view, therefore, he could for tax purposes be treated as a UK resident.

It is not enough that he spent all but 91 days outside the country.

He will now appeal to the Supreme Court.

Anyone that could be affected now needs to ensure they really are ‘non-resident’ under the new interpretation of the UK rules.

If not, they must either change their lifestyle to remove the tax danger by severing their home connections, or they must change their approach to tax-planning.

Otherwise the tax man could be after them.

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  1. I’d suggest ANY person of financial means – and common sense – should get personal advice from a UK Tax Solicitor, then act to follow it BEFORE a relocation, to avoid such tax problems. Realistically, UK government needs every bit of income it can get to meet their spending habits… UGH

    And as seen from recent HMCR decisions/re-definitions (eg, not “days” but “nights in UK/Yr”, a “possible non tax -resident” needs to have his UK tax status tested/confirmed in writing by HMCR before feeling safe.

    No sense in being “Penny-wise” but Pound-foolish”

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