New confusion on UK (non) residency rules.

[Korkenzieher]

This may not be relevant to everybody so I will post the link instead of the whole text (it is quite long).

http://www.telegraph.co.uk/finance/pers ... bills.html

A quick quote:
"The case against Robert Gaines-Cooper, who was claiming residency in the Seychelles, hinged on whether he had actually remained resident in the UK for tax purposes. He was relying on guidance issued in IR20, that he was spending fewer than 91 days a year in the UK, which had included not counting the days of arrival and departing."

To summarise, it seems that there has been considerable confusion brought into the law in the UK as to what exactly an expat is, and how one ceases to be liable in the UK for taxes even as a non resident. In order to 'have a go' at the non-doms, HMRC effectively suspended IR20, which is the revenue's own advice as to how to assess your residency status as an individual. If you are a British Citizen, and that last paragraph means anything to you, then read the article in full. It may be worth pondering the implications for some - it is for me, for instance, for no other reason than I own property there.

You can bet now that the waters have been made murky, it will take forever to clarify the situation.

[lomuamart]

Like yourself, I own property back in the UK but never spend more than 90 days there in any tax year.
I'm not much good with tax matters, but do you have a certificate from the IR stating that you are a non-resident landlord living abroad? I have that - in fact it was a prerequisite for my agents to take me on as a client.
It was very easy to get - 12 years ago. Even with that, I'm not sure where I stand after reading the arcticle.

[PeteC]

It almost looks as if they're leaning towards a system like the US has. Worldwide income is taxed but if you are a bona fide resident or had physical presence in a foreign country and did not visit or fly over US territory for more than 30 days total out of any continuous period of 365 days, you get to wack off the first 86,000 USD (approx.) of foreign earned income. If you had income from any US based business or investment such as real estate, that gets deducted immediately from the 86K exemption and you pay tax on it. You also get certain foreign housing and other cost deductions such as utilities etc.

Just about every year a bill comes up in Congress either to eliminate this program completely and treat expats like any other citizen and charge full tax or, a bill to eliminate tax completely on all foreign income earned by an expat. Neither seems to get anywhere and the 86K remains, being adjusted upward from time to time due to inflation. MIGRANT is an expert on this and can correct if I've gone wrong above.

If the UK adopts a similar system to replace the current confusion, one positive outcome would be they would then have to include expats regardless of where they are in the yearly pension inflation increases. Pete

[STEVE G]

A lot of these problems were caused because of high flying members of the financial industry commuting by air from Switzerland and Monaco.
As the days of travel didn't count they came for a couple of days at a time and got away with it.

[petercr]

My take on this situation is that the UK tax authorities are hell bent on maximising their tax return so whatever your circumstances they will manipulate the rules to acheive that goal.

The only way to minimise potential for tax being claimed is to remove all assets, bank accounts etc from the UK. I think that in common with the CSA the IR will only pursue claims they have a realistic chance of closing out...........So no assets in the UK would in practice put most people beyond their reach

[gilped]

Not true unfortunately. With tax treaties in different countries you can now still be taxed on earnings abroad by 2 different countries. Depends on your earnings of course and where you live but in theory you can. Also moving your money out of the UK is fine but many but depends where you put it. Isle of Man now has to declare your accounts to the Inland Revenue so it is getting more difficult.

[Korkenzieher]

Well, I left almost 20 years ago, but have since then aquired a house. If the implication by HMRC is that that shows intent to return, or somehow that I never really left, then they will have to fight the German authorities for my taxes! At least for the protion when I was resident there. My main worry now is that since leaving Germany, I would find it hard to prove that I have an 'established' residence, on the criteria that the UK tends to demand, anywhere!

It does however, motivate me to sell up (I tried 3 years ago before the financial storm hit), and cut all ties and if necessary never go back to the Blighted place! Always wondered why it was called Blighty. My concern is essentially that between now and then, they effectively could hold my assets hostage under what appears to be a new, deliberately obfuscated regime.