Taxing Times

[Godders]

I have just received revised terms of business from my offshore bank, HSBC. The last item is a little worrying, to say the least. From now on, it announces, the bank will deduct Retention Tax from the interest-bearing accounts of clients who "are or have been"(my italics) resident in an EU member state.

My understanding, when I left the UK, was that once one had established residency in Thailand (which has a double taxation agreement with the UK), I would no longer be liable for tax on any assets held outside of the UK.

Now it seems tax is to be imposed via my offshore bank unless I can produce a certificate from the IR in my former homeland saying I am exempt.

Not the sort of guys I would relish having a friendly sundowner with.

I shall of course be asking HSBC some questions. But meanwhile, have other Forum readers and contributors received the same HSBC booklet - and what do they make of what's going on?

[cclub75]

Where is your HSBC account ?

If in a place like Channels Islands or Isle of Mans... then the party is over. The taxes bogeyman has won.

http://www.offshore.hsbc.com/1/PA_1_4_S5/c...esd_booklet.pdf

Time to move around your money. Real and secure off shore is in Asia now...

Even switzerland, Luxembourg will give up... Too much political pressure.

But asia... HK, Singapore, China... when the dirty EU obsessed with taxes will talk to them about those issues... they will have their ass kicked.

Thanks God ! The ex commies are now the only real free people when it comes to money and taxes, left in the world.

EU, US ? .... Socialists, nothing less, nothing more.

About ESD, i found an interesting article (here).

Edited December 2, 2007 by cclub75

[naka]

When the offshore, IOM and CI banks started to deduct retention tax a couple of years ago

they started to remove it from my accounts.

After faxing them they checked their records and found that I had an overseas (outside EU) address

for many, many years and a C/O address in EU only as a mailing address. I only changed to the EU postal

address because the banks were getting all funny about posting cards to Thailand.

They apolgised and returned all the tax to my accounts.

Perhaps you are still using a UK address ?

This tax is also due to increase fom 15% to 20-25% sometime.

Perhaps your best bet is to move your banking to Singapre etc. Or even open a new CI/IOM account

at a different bank using your new residential address.

By the way you need to be out of the UK for at least three full tax years to claim not ordinarily resident,

and one year for not resident.

Naka.

[PattayaParent]

I have already established with my HSBC account that I do not live in the EU. In fact the account was opened while I was overseas and I have never had a EU address associated with it.

My other offshore accounts have had a UK address previously but all I had to do was provide proof of overseas address to them and they have written to me confirming that the EUSD witholding tax will not be applied.

I suggest you send HSBC a letter from your employer (or other prrof of address) and state that you are not a EU resident and will advise them if you ever return to a EU country to become resident.

[cmsally]

I can see this only being a problem if you opened your acct while residing in a EU country or working temporarily offshore and having a UK/EU mailing address.

If in doubt check and confirm with your bank that your address is outside EU and have some proof of your Thailand address.

Letters from banks, solicitors etc to your Thailand address; make sure you keep them as well as utility bills if you can. All good to have, you never know when you might need them.

[TCA]

By the way you need to be out of the UK for at least three full tax years to claim not ordinarily resident,

and one year for not resident.

Naka.

Can anyone clarify how this works in practice? i.e.

1) Do you continue to pay UK taxes on your worldwide income for the 3 years you're out of the UK, then assuming you can prove your case, the tax is refunded retrospectively?

or

2) When you claim to have left the UK permanently, HMRC treat you accordingly (i.e. stop taxing you) but require ongoing proof of your non residence?

In my case, I'm in Thailand on a Non Imm O visa (work prohibited and not retired), so suspect I'll have trouble proving to HMRC I'm not on a long holiday. Any advice appreciated.

Edited to say sorry to OP for sidetracking the post.

Edited December 10, 2007 by TCA

[naka]

By the way you need to be out of the UK for at least three full tax years to claim not ordinarily resident,

and one year for not resident.

Naka.

Can anyone clarify how this works in practice? i.e.

1) Do you continue to pay UK taxes on your worldwide income for the 3 years you're out of the UK, then assuming you can prove your case, the tax is refunded retrospectively?

or

2) When you claim to have left the UK permanently, HMRC treat you accordingly (i.e. stop taxing you) but require ongoing proof of your non residence?

In my case, I'm in Thailand on a Non Imm O visa (work prohibited and not retired), so suspect I'll have trouble proving to HMRC I'm not on a long holiday. Any advice appreciated.

Edited to say sorry to OP for sidetracking the post.

Search the web for "HMRC IR20"

It's all in there.

Naka.

[palm]

The ex commies are now the only real free people when it comes to money and taxes, left in the world.

The Caribbean and South Pacific are good havens too. Never had a problem in 15 years, banking in both regions.

[cclub75]

The Caribbean and South Pacific are good havens too. Never had a problem in 15 years, banking in both regions.

Sure. But do not forget one point : bad image.

Caribbean off shore paradises have indeed a very bad image, thanks to :

-the criminals

-and the hysteria of USA, UE etc.

Try to make a deal between let's say a french or a german company with a payment from Europe to a bank account in Cayman islands...

You'll have some SAS units crushing your door the next morning.

But Hong Kong ? But Singapore ? Asia ? That's the winning ticket in my opinion.

Edited December 13, 2007 by cclub75

[TCA]

Search the web for "HMRC IR20"

It's all in there.

Naka.

Thanks Naka but I've read IR20 before and am still none the wiser. I understand exactly the conditions (days per year etc.. for non residency) but where I am unclear is as to what happens in practice. The rules state that you are treated as non resident from the day after you leave the UK if you satisfy the relevant conditions (and can provide proof) but obviously having just left you cannot satisfy a criteria based over 4 years.

So my question is :

1) are you taxed normally in the UK until you can satisfy these conditions over the 4 year period?

or

2) if you claim you have left permanently (and provide proof), HMRC then accept you as non resident providing you abide by the days per year rules etc... over the following years and stop taxing you with immediate effect?