New April 2011 Tax Laws in UK Re Xpats !

[subman]

I wonder if any of you guys out there have heard back from there accountants regarding the changes in the UK tax rules for Xpats .

As far as I know the 90 day rule is being done away with and unless you do a Total Sell Up , Close your UK bank account or any other accounts you may have your libel for UK TAX !

I wonder if any body has the update on whats going to happen after April 2011 .

Cheers

Subman

[deepseacon]

By having a UK bank account will not make you become a Resident from NON Resident Status.

You are supposed to break ties with the UK when you become NON Resident Status though which is done in so many ways regarding the 90 days limit being one of them.

But now there is talk if you do all this but your house family is still there you will be classed as a resident regardless of your 90 days out side the UK.

you need to break ties with the UK to stay NON Resident.

http://www.robertgainescooper.com/

check this out above.

[James McLauchlan]

We’ve hammered this one elsewhere and I’m not too sure that anything in 2011 will make too much of a difference to what was discussed here

In Feb 2010

The treasury this week has also published draft rules on a tougher ‘residency test’ which will use a greater level of qualitative judgement to determine residency such as family ties and the extent of business interests when determining liability for tax.

I can’t find solid info on 2011 yet (If anyone can please post to this thread)
What you are asking about is probably those draft rules coming into force (law maybe) in the new 2011 tax year.

I still suggest that if you are ex-pat, and wish to remain so, you cut all financial, property and social ties with the UK (and contrary to the post from deepseacon : including bank accounts!).

From the press and Journal (Published: 13/07/2009)
Read HMRC tightening up on 90-day tax rule for those working overseas

More reading:
http://citywire.co.uk/new-model-adviser/court-strikes-down-90-day-tax-residency-rule/a383122

Some of the above references are 2009 and 2010 but you can see where this is all leading.

It has been suggested that eventually the UK may resort to a USA style tax system whereby, no matter where you live or work in the world, if you are a UK citizen you will be liable for tax and will be required to submit an annual tax return to HMRC.

There are a few way of approaching this:

• Pay taxes and be done with it!
• Live in another EU state and pay taxes there instead (often cheaper).
• Become a citizen of another country and revoke your UK citizenship.

Of course you will then pay taxes there anyway

The way the world is going, nobody will get away Scott free in future.
Take Thailand (as a classic example).. the main reason UK citizens are currently not paying taxes locally is because they are on Tourist visas. I’m sure HMRC aren’t too happy about that state of affairs either. Hence the USA style tax system that has been suggested is under consideration by HMRC…

aka: As a UK citizen, no matter where you live, you will be nailed for UK tax, unless you are paying tax under a reciprocal tax agreement and can prove to be doing so.

[subman]

Thanks deepseacon and James

Yes I do remember we had this Topic before but I was wondering if there was any update on information .
I was fully aware like I said regarding Total Sell Up , Close your UK bank account or any other accounts you may have or your libel for Uk tax .

Sounds like I will have a chat with my accountant but like you say " You are supposed to break all ties with the UK then you become a NON Resident Status " , The 90 day rule is just part of it .

Thanks again .

Subman

[James McLauchlan]

By having a UK bank account will not make you become a Resident from NON Resident Status.

Alone, on it’s own, you may be correct but….. if you are ever investigated by HMRC consider this…

OK
You are a UK Citizen.
You used to live in the UK.
You used to work a lot in the UK sector of the North Sea.
You left the UK years ago and became ex-pat by initially staying 365 days out of the UK.
Since then you have never been in the UK more than 89 day a year.

But:
You still have a UK bank account that is active (in even a small way) and pays some bills, pension, on-line shopping, whatever.
You still have a UK credit card which you use.
You still have a UK driving licence.

For your convenience, your banks statements go to your Mum and Dads UK address
The billing address for your credit card is the same UK address.
Your UK driving licence is registered to the same UK address.

One day HMRC decide to investigate you for some reason.
They may well decide that you have long term ties to the UK and therefore are resident for tax purposes, plus they might decide you have been liable for years and claim many years back tax is owed. The 90 day rule will mean jot in the above scenario!

That could hurt!!

It’ll all end in Beers!

[subman]

Hi James

Yes I was just wondering if there was any update as for your questions .

Yes I hold a Uk Passport
I used to live in the UK
I have not worked in the Uk for the passed 24 years .
I have been living in Thailand for 16 years
I am not in the Uk for more than 65 – 70 days a year

But I still I still have a UK bank account as well as my overseas account .
I still have a Uk Credit Card not that it gets used very much
Still have a Uk driving Licence

But fully understand one day I might get a very large Tax Bill from the uk inland revenue which is why I will see what my accountant says .The Tax man can go back 6 years as I had all this years ago .
But I dont work for any Uk companys or agencys and have not done so for the passed 24 years .

I think at the end of the day its all down to the Uk Inland revenue since they can change over night what the requirements are . I did hope that someone might all ready know since there are thousands who might end up being taxed , Well we shall have to wait and see .

Thanks again

Subman

[SmallWorld]

Subman

I was advised this year that the tax man changed his rules & now if they investigate its only back 4 years.

Point of interest : If your non resident you are not allowed to claim UK SED. However if you do get investigated and the tax mans decides you are Resident for tax purposes you are then entitled to claim SED for the past 4 years. If of course you meet the ever changing rules for SED, which is tough these days.

Hope this helps

[subman]

Thanks Small World for the information oh there only going back 4 years now ! As I still keep all my receipts and stuff going back about 20 years as you never know when someone might ask to see them .

I think at some stage they will change over to some thing like the states or
Australia were it dont matter if your out of the country or not but in the end its down to How Much You Pay !

I have never claim any thing off the state my whole working life but I think I will check with my accountant in the Uk and see what the new rules are .
But the Uk Inland Revenue are all ways changing the goal posts but like you say it best not to give them any thing to get you investigated for in the first place .

Thanks again

Subman

[Anonymous]

I was advised this year that the tax man changed his rules & now if they investigate its only back 4 years

The HMRC can go back indefinitely if they believe the crime of fraud has been committed. Just like any other crime, there is no limit to the length of time an investigation can go back. The often quoted time frames refer to the amount of years you are obliged to keep records. Not the point at which potential fraud is written off.

[SmallWorld]

I,m not talking tax fraud here.

My tax advisor specifically has advised me in relation to SED claims if the tax man decides to investigates they used to investigate back 6 years. This time fram has now been reduced to 4 years.

It’s not unusual for the tax man to investigate a small % of SED claims. Of course if it’s blatant fraud for this time period he may go back futher after he reaches that conclusion. If someone is stupid enough to commit blatent fraud more fool them.

I was investigated a long while back & the tax man actually owed me $ and paid up

[subman]

Yes I know what you mean as in 83 I also had a investigation not that I had done any thing wrong but found myself across the table from the local inspector of taxes and trying to remember were money had come from 6 years back was a pain .

Best I think just to check with my accountant so I dont end up with a megger size tax bill in 4 years time .

Thanks Again

Subman

[Anonymous]

My tax advisor specifically has advised me in relation to SED claims if the tax man decides to investigates they used to investigate back 6 years. This time fram has now been reduced to 4 years.

Then your tax advisor is mistaken. The HMRC can investigate any year and can go back indefinitly. You are only obliged to keep records for 6/4 years. . Some folks mistakenly think that once a claim has passed 6 years they are in the clear. Some high profile tax cases such as those alluded to in this thread (Robert Gaines-Cooper) are facing huge tax bills, not just the last 6 years (or even 4…) There is no statute of limitation on tax investigation or criminal investigations

[James McLauchlan]

I agree with 225 on this. HMRC may well go back four or six years and if they find little of interest to they may decide that investigating further back will be a waste of manpower and will produce little revenue, which is what it’s all about after all. An accountant will tell you what they think HMRC will go back to (four years for example) but ask one to quote the relevant UK law that states four or six years and they probably will not be able to.

On investigation, if HMRC find major areas of concern in say years one, two, and four, they may keep digging back beyond six years.. maybe even eight! Whether individuals are obliged by law to keep records or not, it might well fall on the person being investigated to prove they are clean for the whole period they are under investigation.

If any Ex-Pat reading this has kept good records and have met with all the requirements of being ex-pat over the preceding years (including staying well within the 90 day rule) and not having any long term ties with the UK, then there is a good chance they can sleep easy. I say staying ‘well within’ the 90 day rule because sailing close to the wind on the 90 day rule was part of the undoing of the defendant in the Gaines-Cooper tax case.

If you are in any doubt start digging through this thread and others to see what you can do to protect your financial and possibly your family’s long term interests. By all means take financial advice from a UK tax consultant also, but do not allow them to contact HMRC on your behalf or it will pop you up on HMRC’s radar. If HMRC get a whiff of you seeking tax advice within the UK they may start sniffing around themselves.

A note of caution. UK tax consultants are used to dealing with HMRC. Being UK based they know no other way of doing things correctly (in their eyes).. so if you give them permission to deal with HMRC on your behalf, i.e. Power of attorney for tax purposes, it would be very natural for them to ask HMRC if they have any outstanding issues with your tax affairs. You may not have any outstanding issues, but that inquiry could quite possibly create a new tax file and you may become of interest to HMRC simply as a result of an apparently innocent inquiry via your consultant. HMRC might also ask themselves, that if you are Ex-pat, why have you engaged the services of a UK based tax consultant? Yet another UK ‘tie’ you could do without.

Earlier, I saw mention of not working for UK companies or agencies.
In the context of being ex-pat and the 90 day rule, that won’t mean too much to HMRC either. If you break the 90 day rule, or are within the 90 day rule but are viewed by HMRC as having long term ties (I think they call it ‘centre of interest‘ but can’t remember the exact term) within the UK, they may well request that you to provide a tax return and investigate you from that point onwards. HMRC won’t care if you work though a foreign company in a foreign country and spent most of your living life in a foreign country. As a UK citizen, Ex-Pat or not, if you haven’t paid tax in the country you live in through a reciprocal tax arrangement then they will want their cut.

Soon (ish), for those Ex-Pats resident out-with, the UK I suspect that they will be required to provide proof of Permanent Residency and a tax record from the country they are resident in. No proof of residency and no proof of paying tax elsewhere will result in them being required to submit a tax return somewhere. Not hard to guess where HMRC might feel that a UK citizen should submit their return.

[James McLauchlan]

From ExpatForum.com
http://www.expatforum.com/expats/dubai-expat-forum-expats-living-dubai/51925-avoiding-uk-income-tax.html

Worth a read, especially the bit about a poster asking:

I understand that the number of days an expat can return to the UK in a financial year is going to be reduced to 30. Currently I believe it is 90? Does anybody know anything about this?

Not sure where he got that little snippet from.
Can’t find anything concrete on this as yet, but these so called ‘rumours’ have a horrible habit of becoming fact when it comes to tax.

It’s been mentioned elsewhere too. See below……

From ExpatMoneyChannel.com

Watch Out For Tax Changes

Expats who have had their ‘non-resident tax status’ confirmed by HMRC have no need to trouble themselves about disclosure matters, however constant rumblings to changes to the rules could threaten an expat’s non-resident tax status.

Broadly speaking, ‘non-resident tax status’ is determined by the length of time an expat spends outside the UK in any one or more tax year/s and confirmed by the number of days spent back in Blighty calculated over a one or three year period.

A ‘pumpkin’ rule introduced in 2008 stipulates that the physical presence of an expat in the UK at midnight on any given day, now counts as one full day’s presence. This seemingly insignificant little rule change will notch up the number of days some expats spend back in the UK quite considerably. Cinderellas who habitually stretch their visit allowance to the wire had better watch out.

A move to US style residency rules?

What’s more, current rumblings in the undergrowth suggest further changes are afoot. My guess is we’ll see the UK rules on non-residency mirroring the US model. This would mean that any expat resident in the UK for 31 days or more within a single tax year, or 183 days or more during a three year period, will be deemed to be resident for (UK) income tax purposes. So, an expatriate with non-resident tax status would have to ensure that he/she spends on average less than 61 days back in the UK in any one year stretched over a three year period.

Such a move hasn’t happened yet, but non-resident expats should keep watch for any further developments and diary their cross-border movements carefully. We’ll keep you posted.

Source: http://www.expatmoneychannel.com/content/expat-tax

[subman]

Thanks for the feed back guys I think I will wait and see what my accountant has to say when I return .

As for working for Non UK companys and Agencys I have found this is the best way to keep off the radar because as soon as you work for a UK based company or agency your be flagged and your details will be given up to the
Revenue .

But I think your right very soon the Uk will change over to some thing like the states or Australia its only a matter of time so best to make the most of it while you can .

Cheers

Subman

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